Solana (SOL) Price Plunges On FTX Rumors, Buy Or Sell Now?
September 11 2023 - 2:45AM
NEWSBTC
Amid the bankruptcy proceedings of crypto exchange FTX, the market
is in a state of heightened anxiety, and Solana (SOL) in particular
saw a 7% drop in price yesterday following the spread of rumors.
FTX is scheduled to appear in Delaware Bankruptcy Court on
Wednesday, September 13, to seek approval for the liquidation of
$3.4 billion in SOL, FTT, BTC, ETH and other crypto assets. The
event has led to widespread concerns among market analysts and
participants, who speculate that the liquidation could exert
significant selling pressure on an already fragile market. As of
January 17, FTX’s crypto holdings were estimated to include $685
million in Solana (SOL) tokens, $529 million in FTT tokens, $268
million in Bitcoin (BTC), $90 million in Ethereum (ETH), and
various other assets such as Aptos, Dogecoin, Polygon, XRP, and
stablecoins. The Solana Situation Solana, which represents FTX’s
largest holding, experienced a sharp decline in its price
yesterday. This can be largely attributed to the rumors circulating
on crypto Twitter (X) suggesting a massive dump of SOL by FTX. But,
as it turns out, this rumor lacks substance. A screenshot that
surfaced on Twitter, detailing the assets held by FTX debtors as of
January 17, 2023, confirms that FTX is in possession of
approximately 47.51 million SOL. Related Reading: Crypto Alert:
Solana, Aptos, APE And More Token Unlocks Coming This September
However, there’s a crucial detail that many seem to have
overlooked. The SOL tokens held by FTX debtors are not readily
available for sale. Contrary to the narrative presented in the
visual data shared, these SOL tokens are under a lockup agreement.
FTX, in collaboration with Alameda, had previously acquired 16% of
the SOL supply directly from the Solana Foundation. This
acquisition came with strings attached, namely a lockup schedule.
The current stash of 47.51 million SOL, which represents 8.82% of
Solana’s total eventual supply, is bound by this agreement. Thus,
the misconception that this SOL reserve is liquid and primed for a
market dump is fundamentally flawed. The reality is that these
tokens are locked and will undergo a linear vesting process
spanning from 2025 to 2028. Accessing these funds prematurely is
not an option. Related Reading: VISA’s Stablecoin Payments On
Solana Propel SOL To 5% Gain, Bulls Eye Price Breakout As per the
terms of the agreement, the SOL tokens will undergo linear monthly
unlocks until January 2028. Furthermore, specific tranches, such as
the 7.5 million SOL acquired from Solana Labs by Alameda Research,
will only become available on March 1, 2025. Another tranche of
61,853 SOL is slated for unlocking on May 17, 2025. In light of
these facts, any fear, uncertainty, and doubt (FUD) suggesting an
imminent SOL dump by FTX can be confidently labeled as
misinformation. SOL/USD 1-Day Yesterday’s 7% drop in the Solana
price may have been an overreaction by the market, which believed
the rumors of an upcoming dump and sold en masse out of panic.
However, not much has changed in the technical chart picture for
SOL in the 1-day chart. Already on August 31, SOL fell below the
50% Fibonacci retracement level at $20.26. The attempts to regain
it failed in the second half of the week last week. Yesterday’s
slide has now left SOL vulnerable to a correction lower to the
61.8% Fibonacci retracement level at $17.39. A price recovery can
be expected at this level. A rise above the 20-day EMA, below which
Solana fell in mid-August, would be an important step for the bulls
on the road to recovery. As then, a recapture of the 50% Fibonacci
would be crucial. In a bearish scenario, which currently looks less
likely, SOL also loses the 61.8% Fibonacci retracement level. A
drop to $13.30 would then be the bears’ next target. Featured image
from iStock, chart from TradingView.com
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