Solana (SOL) Price To Drop Another 30% Following Alameda Collapse

NEW DELHI (CoinChapter.com) — Solana (SOL) price continues posting double-digit losses for the second day in a row as the Alameda contagion spreads.

The SOL price fell by nearly 53% in under four days, dropping to $17.6 on Nov 9 from $37.1 on Nov 6. This drop brought Solana closer to confirming a technically bearish continuation setup called the descending triangle.

In detail, a descending trendline connecting swing highs and a horizontal trendline joining swing lows form the pattern. The height of the triangle’s thickest section determines the price target in a descending triangle setup.

The pattern gives SOL price a breakdown target of $12.80, down 30% when measured from its current price at $18.35.

SOL’s price recorded a fall of more than 34% on Nov 9, as the Solana token reached an intraday low of $16.2 from the day’s high of $24.6. However, SOL bulls recovered some lost ground. Meanwhile, if the SOL price continues falling, the token would likely fall to test support near $17.23.

Moreover, a marketwide sell-off could see the Solana token price reach $15.3 before recovering.

The relative strength index for SOL became oversold on Nov 9, clocking at 27.16 on the daily chart. Oversold RSI levels often act as a precursor to bullish trend reversals. As such, traders might start buying SOL tokens.

An uptrend might help the SOL price move above the resistance near $20.4. A break and hold above immediate resistance could help the Solana token reach resistance near $23.4 before retreating.

Alameda Insolvency Rumors And FTX Debacle Hit SOL

Binance’s decision to dump its FTT holdings started the downtrend. In detail, the exchange’s decision took cues from allegations that Alameda Research, a crypto-focused hedge fund Sam Bankman-Fried founded, might be facing insolvency issues due to exposure to illiquid altcoins like FTT.

Alameda had $14.6 billion worth of assets in Jun, with most of it in FTT tokens worth $5.8 billion. Additionally, the hedge fund held $1.2 billion Solana token (SOL), $3.37 billion in unidentified “crypto held,” and $2 billion in “investments in equity securities.“

Also Read: FTX-Binance Saga: FTX Halts Withdrawals, Binance Announces Its Buying FTX.com

Meanwhile, the firm reported liabilities worth $8 billion, including $2.2 billion in FTT collateralized loans. The situation led to analysts sounding warning bells for Alameda.

The reality of this situation is that the vast majority of the value Alameda accrues to FTT token is unrealizable, and the fair market value of their FTT in the event of large sales would rapidly approach $0

said Mike Burgersburg.

However, Alameda’s CEO, Caroline Ellison, refuted the insolvency rumors, stating the firm had more than $10 billion in assets.

Industry reports indicate that Alameda has been selling its SOL holdings and using the funds to buy FTT tokens to prop up the FTX token price. Moreover, Binance buying out FTX has prompted investors to move to BNB instead of SOL.

Meanwhile, a major Solana whale liquidation has increased the SOL token’s selling pressure. Chinese crypto journalist Colin Wu stated that the whale wallet had “2,450,418.5 SOL (worth over $51 million) in collateral and 44,871,609.6 USDC in debt.“

As of now, it is unclear how far the FTX contagion will spread and how the Solana token might react.

Polygon will likely become another victim of the FTX contagion; here’s why.