Solana
FTX Selloff Fears Trigger 5% Drop, Liquidate $125M Shorts? And after?
Solana, one of the largest cryptocurrencies on the market, faced a significant 5% decline attributed to concerns. surrounding FTX liquidation plans. However, this downturn was quickly followed by a rebound, opening up the possibility of liquidating approximately $125 million in short positions.
The decline of Solana’s open interest
According to CoinGlass data, Solana’s SOL experienced a 40% decrease in open interest (OI) over the past 30 days, falling to $1.78 billion on May 9. This decline in OI often signifies market uncertainty and traders’ reluctance to establish positions in cryptocurrency.
Despite recent market turmoil, Solana has demonstrated a tendency to quickly recover from declines, posing a threat to existing short positions. Over the past month, Solana has repeatedly rebounded by 5% in 24 hours after facing price drops.
For example, on April 19, Solana saw a similar 5% drop before quickly rebounding to $157, just before Bitcoin’s April 20 halving. If Solana’s price were to rally 5% to its May 7 level of $157, it could trigger the liquidation of $125 million in short positions, adding volatility to the market.
Factors behind the price drop
However, the recent decline The Solana Prize can be awarded to FTX’s announcement of its intention to sell assets to compensate victims of its collapse. Given that Solana represents a significant portion of these assets, the announcement likely had a pronounced impact on investor sentiment.
Additionally, overall market sentiment saw a decline, the Fear and Greed Index drop of 13 points over the past 24 hours, reaching a score of 55 on May 9.
Solana will surpass Ethereum
Recent reports suggesting that Solana could potentially surpass Ethereum in terms of transaction fees have also influenced its short-term price movements. The possibility of the Solana network challenging Ethereum’s dominance in transaction fees is seen as a positive indicator of Solana’s price prospects moving forward.
For now, Solana is priced at $143.81, reflecting a slight decline of 2.5% over the past 24 hours. Despite this decline, Solana’s market capitalization climbed to $64 billion.