Key Insights
- Solana’s price plummeted this week but has started to recover over the last few hours.
- However, the consensus on what caused the dip was the insolvency crisis at FTX and Binance’s involvement.
- Solana declined by as much as 60% over the last week, bringing the price of the cryptocurrency to its knees from $39 to $17.
Solana started to plummet this week. The resulting dip lasted for more than two days and sent the value of Solana to half of what it was in the previous week.
In the heat of the market dip that followed and eventually affected several other altcoins plus Bitcoin and Ethereum, several theories from several analysts started to fly around.
However, the general consensus on what caused the dip was the insolvency crisis at FTX.
And while the general market appears to have moved on at the end of the day, the SOL stakeholders and the development team (Solana co-founder Anatoly Yakovenko) have not publicly addressed the issue of the cryptocurrency’s flash crash, what caused it, or what to expect in Solana’s future.
Yakovenko’s Comments on FTT Crash
Yakovnko’s reaction to the Solana saga cannot entirely be referred to as an address to the situation.
Commenting briefly on Twitter, Yakovenko mentioned that Solana did not hold any FTX assets before or after the crash and still has tons of “runway” and a small team.
Contrary to Yakovenko’s comment, according to Huobi Research, FTX made direct investments in several businesses, including Solana, through Alameda. Yakovenko’s response may have fallen short because it raised more questions than answered.
By extension, the dump and sell-off on Solana this week was probably caused by fear surrounding a potential dump of the SOL tokens believed to be owned by the now-defunct exchange, FTX.
Earlier in the week, it was also reported that roughly 30 million SOL tokens would be unlocked from staking reserves and that these tokens may find their way into exchanges.
This and several other factors stoked the flames of the fear market on Solana, causing that big of a dump on the cryptocurrency.
Why Is the Solana Unlock Postponed?
The Solana unlock was originally scheduled for 10 November but was postponed by the foundation via an announcement on Twitter.
…in order to restake to validators operating in alternative locations, which took effect at epoch 370. While 28.5M SOL was in the process of being unstaked during this epoch, the plan to unstake has now been postponed, and all 28.5M SOL have now been re-staked.
— Solana Foundation (@SolanaFndn) November 9, 2022
These 28.5 million SOL tokens reportedly amount to about 5.4% of the total supply and will be unlocked later.
Solana(SOL) Price Analysis
Solana declined by as much as 60% over the last week, bringing the price of the cryptocurrency to its knees from $39 to $17.
Despite a day and a half passing since the massive dip in the cryptocurrency and its normalization to the $17 zone, SOL is still in the oversold zone and shows that the bears are still in control of the market.
However, if the bears continue to push the cryptocurrency lower without a proper correction, a shift to the upside may occur.
The Total Value Locked [TVL] on the Solana chain also does not appear encouraging. Along with the price drop on Solana, the TVL also dropped by as much as 50% over the last week.
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