Solana entities sold 50M tokens to FTX — How long will SOL price suffer?

Solana (SOL) has misplaced 60% of its market worth in every week resulting from its publicity to the now-defunct crypto exchange FTX, which may proceed to hang-out the “Ethereum killer” effectively into the longer term.

FTX/Alameda publicity hurting Solana value

FTX and its sister-firm Alameda Analysis is liable to have management over 50 million SOL, based on Solana’s statement launched on Nov. 10.

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The FTX entities obtained 4 million SOL from the Solana Basis on Aug. 31, 2020. Additionally they began receiving a portion of 12 million SOL from Sep. 11, 2020, and almost 34.52 million SOL from Jan. 7, 2021, by a “linear month-to-month unlock” mechanism.

Abstract of SOL gross sales to FTX/Alameda Analysis. Supply: Solana Labs

Moreover, the FTX entities began receiving parts of a 7.5 million SOL reserve from Solana Labs on Feb. 17, 2021. Notably, a transaction value 62,000 SOL between the identical entities stands unsettled.

Most SOL tokens promised to FTX/Alameda are vested, that means the agency doesn’t but have them in custody however is liable to receive them by the linear month-to-month unlock mechanism. The final of those unlocks will happen by January 2028.

That leaves the market with interpretations about what would possibly occur to the SOL tokens as soon as they’re unlocked, given FTX’s bankruptcy filing that is prone to put a freeze on all remaining funds.

Additionally, the agency reportedly has $9 billion in liabilities versus a $1 billion steadiness sheet, which may immediate its trustees to liquidate its SOL holdings to repay debtors.

To keep away from such a state of affairs, Solana may make technical adjustments to its token economic system, lowering FTX’s impression. One recent governance proposal submitted on Nov. 13 offered just a few choices that could possibly be on the desk, together with:

  1. The errant allocation is burned.
  2.  Improve the lock to 10 years on the errant allocation.
  3. Airdrop all SOL token holders’ further SOL, apart from the celebration holding the errant allocation.
  4. A mix of the above.

SOL value reduction bounce?

From a technical perspective, Solana reveals indicators of bullish divergence between its value and relative power index (RSI).

A bullish divergence materializes when an asset’s value varieties decrease lows however its momentum indicator type the next low. Conventional analysts see it as a purchase sign, which can lead to a short-term SOL value restoration on its day by day chart.

SOL/USD day by day value chart that includes bullish divergence. Supply: TradingView

SOL/USD may rise towards $18, its vary resistance degree, within the occasion of a short-term restoration. In different phrases, a 20% rebound.

Associated: Liquidity hub Serum forked by developers after FTX hack

However on longer-timeframe charts, SOL may see additional decline towards $2.50, or an 80%-plus drop, in 2023, based mostly on a large head-and-shoulders setup proven beneath. 

SOL/USD weekly value chart that includes head-and-shoulder breakdown setup. Supply: TradingView

Curiously, the token’s draw back goal falls in its most voluminous vary, per its Quantity Profile Seen Vary, or VPVR, indicator.

The views and opinions expressed listed below are solely these of the writer and don’t essentially mirror the views of Each funding and buying and selling transfer includes danger, you must conduct your individual analysis when making a call.