Down the Rabbit Hole: The FTX Impact
In late 2022, the world of crypto absorbed a colossal shock with the collapse of FTX, an exchange once brimming with promise. Among the many casualties was Solana (SOL), which saw its value plunge like a lead balloon, from a lofty $259.96 to a tragic low of $9.89. That’s a staggering drop of 96.3%! You didn’t need to be a finance professor to feel the weight of that crash. But like a cat with nine lives, Solana has shown resilience in the face of adversity.
The Comeback Kid: 2023 Recovery
Fast forward to 2023, and Solana is back on the scene, climbing 175% and peaking at $27.37. The ecosystem is buzzing with activity, proving that it might not be down for the count just yet. But of course, just as it seemed the dust was settling, another storm rolled in when a Delaware Bankruptcy Court granted permission for the sale of FTX digital assets, including a jaw-dropping 55.75 million SOL worth over a billion dollars. Talk about rolling the dice!
The Numbers Game: Unpacking the Selling Pressure
In light of this news, the price of SOL took a nosedive to $17.96. It seems the market responded, with traders liquidating $800,000 worth of long positions in a day. Yikes! But hang on a second—crypto trader MartyParty points out that things might not be as bleak as they seem. He claims that the majority of FTX’s SOL stash is locked until the years 2025 to 2028. So, those panic buttons may not be necessary just yet.
FTX’s Holdings: The Great Token Lockdown
The Solana Foundation has shed some light on FTX’s SOL holdings. It turns out that over 33 million SOL coins are on lockdown until 2027, which is over 60% of their total stash. So even though the liquidation of FTX is looming, the tokens won’t flood the market immediately, easing the potential selling pressure significantly. Don’t worry, it’s not a fire sale!
Is a Short Squeeze on the Horizon?
With all this happening, one has to wonder—could there be a short squeeze in the cards? Data from CoinGlass indicates a flood of short orders, with funding rates plummeting to -21.1% per annum. A short squeeze occurs when traders betting against an asset are forced to buy back at rising prices, potentially leading to a wild upward rush. According to MartyParty, the retail shorts are nervously eyeing the $30 liquidation mark, preparing for a market maker squeeze that could turn their fortunes upside down.
