Recent data suggests that the market outlook for Solana (SOL), one of the popular altcoins, is increasingly downward due to developments related to the bankrupt cryptocurrency exchange FTX. The total number of open positions for SOL has significantly increased, reaching an astonishing 11.7 million. As the number of open positions rises, trading volume has decreased, and liquidations have reached 3,300 contracts.
FTX Blow to Solana
According to CoinMarketCap data, Solana’s SOL has been trading at $17.67, experiencing a 3.96% decrease in the past 24 hours. The popular altcoin is currently far from its glorious days, and it is not only individual investors who feel the pressure on the price. The decentralized finance (DeFi) environment in Solana is also showing signs of struggling with the decrease in liquidity and trading volumes.
The fundamental reason behind the price decline of this altcoin lies in the news that FTX is planning to liquidate $3.4 billion worth of cryptocurrencies held in reserves, including SOL. FTX has requested permission from the bankruptcy court to liquidate a significant portion of the cryptocurrencies in its reserves. Although the exact timing of this liquidation remains a mystery, this possibility alone has caused unease throughout the market.
Dangerous Outlook for SOL’s Price
Data indicates that traders are heavily shorting SOL, meaning they are betting that the price of SOL will continue to decline.
The increase in liquidations in Solana also reveals that many investors have been caught on the wrong side of the downturn. Experts expect FTX’s plan to liquidate cryptocurrencies in its reserves, although not proven as claimed, to be a catalyst that could pull Solana further down. Indeed, SOL is currently caught in a downward spiral of expectations, and the data confirms that the price will continue to fall. Whether it is the increasing open interest, decreasing trading volume, or rising liquidations, all indicators point downwards.
Current data advises SOL holders and traders who have opened or plan to open positions in SOL to exercise caution and manage their positions with great care. The current market dynamics of Solana are filled with risks, and the signs of decline cannot be ignored.
