Key Takeaways:
- Investors and traders believe Solana might not recover from the ongoing downtrend.
- SOL's exposure to Alameda might drag down the token.
NEW DELHI (CoinChapter.com) — The native token of blockchain platform Solana, SOL, saw its price drop nearly 63% this week between the weekly high of $33 and the week’s low of $12.4. The token was likely reacting to the contagion of the FTX-Alameda collapse.
Coinchapter surveyed nearly 5,000 crypto investors and traders via email and Twitter. Over 58% of those surveyed believed SOL might not recover from its recent collapse. While the response on Twitter was mostly in favor of SOL, the response to the email survey was darker.
Nearly 65% of respondents to the email survey said Solana’s time might end soon. Michael Gogel, a crypto’ forecaster,’ told Coinchapter that he was not confident of Solana’s recovery. When asked, “Do you believe Solana has a chance of recovering from the latest contagion?” Gogel said:
No, I don’t. [SOL] had no value in the first place besides mechanics, like BNB and all the coins.
Meanwhile, nearly 38% of respondents on Twitter believe “Solana will be dead” by the end of 2022. Concurrently, less than a quarter of the survey takers were hopeful of SOL’s recovery in the next two months.
Although social media surveys are not 100% reflective of market trends, given users’ ability to vote from multiple profiles, many investors remaining bearish regarding Solana’s future does not bode well for the SOL token.
Users remained critical of the SOL token. Chuck, a Twitter user, commented that the SOL token would likely end up “into the toilet” by the end of the year. Moreover, the falling crypto market has resulted in traders becoming disillusioned.
Abhinav Sharma, a chartered accountant from Dubai who moonlighted as a crypto trader for over three years, told CoinChapter that he’s “finally out” of the space to focus on organic methods to grow wealth than losing it all overnight.
“We have kids to feed,” said Rastogi, and the amount of “fu**ery happening in the crypto sector is extremely dangerous for common folks like myself.”
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A majority of the survey participants were from the age group of 20-29 years. Additionally, more than 84% of the responders were males, highlighting the gender gap in crypto investors.
FTX-Alameda Contagion Responsible For SOL’s Predicament
Meanwhile, a second poll by CoinChapter revealed that the crypto community believes FTX-Alameda contagion would be the major reason behind SOL’s failure to recover. Over 41% of survey takers blamed the failed crypto exchange for Solana’s downturn.
Interestingly, nearly 25% of the respondents believed that the Solana project “was destined to fail.”
Macroeconomic factors, such as rising inflation and geopolitical tensions in Europe, were the third reason behind the Solana token’s downfall. A Twitter user with the handle ‘Rock Lobster‘ seems to have lost belief in cryptos, stating, “Crypto is a dumb idea… 100%.”
With so much negative sentiment against the token, Solana has an uphill task in getting back into investors’ good graces. Moreover, Solana’s network outages have not helped build trust with the community.
The blockchain platform has suffered ten partial or full outages over the past year. Solana co-founder Anatoly Yakovenko accepted the mired reputation of the platform at a recent conference. Yakovenko stated that Solana had spent the entire year fighting to stay reliable.
The FTX Meltdown
Meanwhile, the FTX meltdown surprised the crypto markets, with the sector losing nearly $1 trillion and long investors down by millions. The reason why the FTX contagion has drastically impacted SOL price is Sam Bankman-Fried’s other firm, Alameda Research.
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Sam was one of the earliest investors in Solana, and FTX’s sister company Alameda holds over $1 billion in SOL tokens. However, with Alameda facing insolvency, investors are worried about a potential liquidation of Alameda’s SOL holdings.
Moreover, FTX, FTX US, and Alameda filed for “voluntary Chapter 11 proceedings in the US,” tweeted Bankman-Fried. Per Alameda’s balance sheet, the firm has $292 million of “unlocked SOL tokens, $863 million of locked SOL tokens, and $41 million in SOL collateral.
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Solana validators unlocked 49.6 million SOL tokens (worth nearly $1 billion) on Nov 10. The unlock value represents nearly 13% of the coin’s supply. Furthermore, the amount marks the second-largest volume of tokens validators unlocked in any Solana epoch.
Hence, the liquidation would likely further push SOL’s price down as traders offload their tokens to fend off further losses.
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