FTX’s sale concerns causing Solana to lose 5% of its value in one day seem to have impacted current long and short-focused positions. Accordingly, there is a risk of $125 million if the asset returns to its recent performance. This situation shows how crucial price movements are for SOL coin. Let’s look at the details.
Solana’s Open Interest
CoinGlass data shows that Solana’s open interest decreased by 40% over the last 30 days, dropping to $1.78 billion on May 9. This sharp decline indicates that investors are losing confidence in Solana and avoiding taking positions on its price.
However, Solana has recently demonstrated a rapid recovery capability, which means that over one hundred million dollars in short positions are currently at risk. In the last 30 days, Solana experienced situations where its price both dropped by 5% and recovered within the same period.
For example, on April 19, Solana quickly recovered to $157 after dropping 5% within a few hours before Bitcoin’s halving. Similarly, if Solana’s price increases by 5% to reach $157, $125 million worth of short positions will be closed.
A Trader’s Warning and FTX Announcement
Just days before, right before Solana began to lose value on May 7, crypto trader CryptoAce accurately predicted to his 13,400 followers that a decline would result in a rejection at the $142.50 level.
However, regarding Solana’s latest drop, FTX announced the same day that it had sufficient funds to reimburse those affected by the exchange’s collapse after selling its assets.
This event came along with a decline in overall cryptocurrency market sentiment. The Fear and Greed Index dropped 13 points in the last 24 hours to 54 on May 9. New findings in the competition between Solana and Ethereum could have affected the price in the short term.
On May 8, situations emerged that Solana’s network transaction fees might surpass Ethereum’s. This could be a positive sign for an increase in Solana’s price. On May 7, Solana generated $2.8 million in revenue from transaction fees, while Ethereum generated about $3.1 million. This figure highlights Solana’s potential to compete with Ethereum.
