Key Insights
- FTX has been granted approval by a US court to liquidate $3.4 billion worth of digital assets, including Solana, Ethereum, and Bitcoin.
- The crypto market is showing signs of weakness, with the global market cap down nearly 30% in the last 24 hours.
- Solana has bucked the trend and actually risen 4.5% in the last 24 hours, despite the selloff in the wider market.
- This is likely because SOL’s majority holdings (about $1.2 billion) are staked and cannot be liquidated.
- SOL is still trading above its relevant support levels, but it is approaching a key resistance level at $18.90.
This week, the bankrupt crypto exchange, FTX got approval from a US court to liquidate a whopping $3.4 billion worth of digital assets.
According to reports, Judge John Dorsey of the United States Bankruptcy Court for the District of Delaware authorized the sale of billions of dollars worth of Solana, Ethereum, Bitcoin, and other assets, this week on Wednesday.
This is a problem, from an obvious standpoint.
3.4 billion dollars suddenly flooding the market is bound to affect the mentioned cryptocurrencies. This is especially true for Solana, which has been through some rough weather since 2022.
However, what if there was a catch? Read on, and find out what it is.
Warning: Major Cryptocurrencies May Be Gearing Up For a Massive Drop
The crypto market’s performance isn’t particularly bullish.
However, it isn’t so bearish either.
Looking at the crypto market’s performance as illustrated by the snapshot below, we can see that cryptocurrencies like Bitcoin, Ethereum and others are either bullish on daily or weekly timeframes.
However, don’t let this fool you.
The crypto market may indeed be gearing up for a drop.
Consider the global crypto market cap for example, that has suffered nearly a 30% drop over the last 24 hours, and has come crashing down from $1.04 trillion to less than $500 billion, before normalizing again to $750 billion.
Trading volumes have also taken a massive beating, and have dropped by 68%, to 9.98 billion over the last 24 hours according to CoinMarketCap data.
This apparent weakness of the crypto market is showing a major sign of an impending drop, and it may be wise to be prepared.
Solana’s Price Shoots 4.5% Despite Recent Developments
Does SOL care about the selloff?
Obviously not.
On the weekly timeframe, SOL is performing just the same as the other cryptocurrencies on the market.
Nothing special about that.
However, over the last 24 hours, SOL reacted to the FTX selloff news with a spectacular 4.5% rise from $17.96 to $19.27.
The cryptocurrency has so far normalized to the $18.75 zone but is still holding a 3.7% intra-day rally.
This is even more amazing, considering how the Consumer Price Index (CPI) data for August in the United States shows that inflation increased from 3.2% to 3.7%.
Here’s How Solana May Escape an Insane Drop
For traders and investors familiar with the crypto market, it is easier to figure out that SOL’s price rally amid the bearish news does not mean that the cryptocurrency is now safe from any impending drops.
In fact, according to the chart, SOL is in a delicate spot.
However, why did Solana not decline so steeply so far?
Analyst, Michaël van de Poppe believes that Solana and the rest of the crypto market may not have reacted to the FTX selloff and the CPI data, because SOL, which accounts for the majority of FTX’s holdings (about $1.2 billion), is currently staked and hence cannot be liquidated.
According to Van de Poppe, just 7 million $SOL are accessible to FTX for liquidation, and the majority of these tokens have been sold recently.
Because of this, it is relatively safe to conclude that SOL may be relatively safe from the impending selloff.
Solana (SOL) Price Analysis
Solana appears healthy in the charts and is still trading above its relevant support levels.
At the time of writing, the cryptocurrency is currently trading below its 50 and 200-day moving averages, with its RSI still showing signs of being in bear territory.
The price of Solana has been falling below the $22 support throughout this week and finally dropped below the $20 mark.
However, Solana appears to have found support and may be eyeing a fresh increase after a break above the $18.90 resistance.
This presents three scenarios. Solana can either:
- Break through $18.90 and target a price increase to $25
- Fail to break through $18.90 and decline further down to retest the trendline, before rising again
- Fail to break through $18.90, fail to initiate a bounce from the ascending trendline, and instead decline further down to below $10.
In all, this ascending trendline is the key zone to watch out for, because a decisive close below it would signal a serious price decline on Solana.
Disclaimer: This article is intended solely for informational purposes and should not be construed as financial advice. Investing in cryptocurrencies involves substantial risk, including the possible loss of your capital. Readers are encouraged to perform their own research and seek guidance from a licensed financial advisor before making any investment decisions. Voice of Crypto does not endorse or promote any specific cryptocurrency, investment product, or trading strategy mentioned in this article.
