Here’s How Solana May React to FTX Unlocks

Solana tested the $180 support as it experienced a spike in selling volume. Prices at the time of writing indicate that the downtrend is ongoing.

The fifth-largest coin started Monday at $188 but took a turn for the worst as prices plummeted. The bulls attempted a buyback at $180 as SOL lingered around the mark. However, they failed, causing further declines to $174.

The altcoin trades slightly higher than its low, indicating notable buyback. It edges closer to $180 but risks further descent.

SOL marks its third day of downtrends. The latest downhill movement started on Saturday when it opened trading at $199 but closed at $194, losing 2%. It worsened the day, with the coin slipping below $190 and closing at $188.

Currently down by almost 5%, the fifth largest coin risks slipping down the market cap rank. Nonetheless, the continuous decline sparked minimal reactions from SOL holders.

Why is Solana Dipping?

It is worth noting that the altcoin grappled with significant selling pressure last week. The one-week chart shows that it surged to a high of $209 but retraced, dipping to a low of $186 and losing over 6% following a slight recovery.

The selling pressure from the previous session spilled into the current week. Solana bulls have yet to recover from the selloffs, and the bears continue selling. However, several fundamentals played out, worsening the bearish sentiment.

The Libra memecoin made waves a few days ago, with endorsement from Argentina’s President Javier Milei. The asset saw a considerable price surge, bringing its market cap to over $4 billion. LIBRA quickly lost momentum, losing over 80% of its market cap in minutes.

The rise and fall of this token with Milei’s endorsement resulted in several backlash for the involved personalities and Solana. The President currently faces impeachment and criminal prosecution.

Data from Solscan shows declining trading activity across Solana’s DEXs. Trading volume and revenue gradually reduced over the last three days—data from DeFiLlama points to a decline in TVL during this period.

More negative news made the round while the asset grappled with the memecoin’s backlash, and more negative fundamentals hit the market. The FTX Estate announced plans to unlock $2 billion of SOL on March 1. Prices retraced further following the news.

How Will SOL React?

It is worth noting that FTX played a huge role in SOL’s recent decline. Its previous dip to $8 happened following the collapse of the exchange. Further news of the defunct firm’s plans to pay off its client saw the altcoin dip further.

Solana may see massive retracement during the unlock. There was no announcement about a possible spread of the unlocking. Such a huge volume may result in a spike in supply. As with most assets, excess supply may result in lesser value, and further retracement may follow.

Conversely, some analysts believe that whales and other investors may gear up to buyback the coin after the unlock. However, it is almost certain that the market will react negatively to the unlock. Nonetheless, the firms who bought these coins at the auction did not reveal their plans.

The one-day chart reveals several levels to watch as the unlock draws closer. Solana trades around the 78% Fibonacci retracement level. Previous price movement suggests that a rebound may occur around this mark.

The $170 support remains another tough level to keep an eye on. Nonetheless, the coin risks losing the barrier, dipping closer to the 100% fib level at $140.

 

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