In the last week, the token lost 60% of its value, and in less than 10 days, the crack is two-third of its value. However, compared to its peak of around $260 about a year back, the token eroded over 95% of its value.On Monday, Solana tumbled to $12.25, its lowest level since February 2021, before recovering to $14.5 at 15.30 hours on Monday, November 11, the data from coinmarketcap suggested.
Amid the carnage in the crypto market, a widely popular token, which delivered astounding returns over the years, is back to ashes in just a few days, wiping out a few more billion dollars from investors.
Solana, famed as the Giant Ethereum Killer, is now back to dead turf as it is being shunned by investors at a rampant pace.
Market participants said that as the FTX debacle unfolded, many investors and validators unstaked their Solana assets from the blockchain and liquidated them, causing a price crash in the token.
Vikram Subburaj, CEO of Giottus Crypto Platform, said that FTX founder Sam Bankman-Fried was one of the biggest promoters of the Solana ecosystem. Apart from FTX, Alameda, a quantitative research firm floated by him, had a huge position in Solana as well.
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View Details »Akshay Bajaj, CEO and Co-Founder of DeFiVerse, said that FTX owned a lot of Solana, and people were speculating that FTX was dumping millions of the tokens to prop up their $FTX token price, which had been tanking after they filed for bankruptcy.
In the last week, the token lost 60% of its value, and in less than 10 days, the crack is two-third of its value. However, compared to its peak of around $260 about a year back, the token eroded over 95% of its value.
On Monday, Solana tumbled to $12.25, its lowest level since February 2021, before recovering to $14.5 at 15.30 hours on Monday, November 11, the data from coinmarketcap suggested.
With a market cap of $5.25 billion, the token slipped to the 15th spot among the largest crypto assets from the eight spot about a week ago. The volumes rose 45% to 1.22 billion, signaling the heavy dumping by the investors in the token.
Edul Patel, CEO and Co-founder, Mudrex, said that these situations are making investors anxious if the protocol has been affected too.
“With a series of events happening around FTX, there could be chances of the token losing more value in the coming days due to heavy speculation and fear among the market participants,” he added.
Experts remain cautious over the future of the token, but said that it is too early to write it off Solana, especially because nothing has changed in the product primarily.
There were few technical glitches in the past that stalled the Solana network. If the errors are fixed, and the network becomes reliable, we can expect activity to return to the Solana ecosystem.
There were wrapped assets of BTC and ETH in the Solana network that were issued and backed by FTX. These have lost a lot of value, killing much of the total value locked and DeFi activity in the Solana ecosystem, said Subburaj.
Catching a falling knife can be dangerous as the bottom is not predictable, said the market experts with a suggestion to avoid bottom fishing. Patience is the key, they add.
Entering any trades at this time would be very speculative, and I would be very careful trying to play this market, said Bajaj from DeFiVerse. “There may be a bigger fallout in the coming weeks,” he cautioned.
As a word of advice to investors, Patel from Mudrex said it is a good time for market participants to observe the market rather than get into aggressive buying activities.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)