Solana: 80 Million SOL From Staking Contracts may Kill the Project

Paigambar Mohan Raj
Source: Bitcoinist

Solana (SOL) was one of the worst affected projects after the collapse of FTX. The token had considerable ties to the exchange, with founder Sam Bankman-Fried praising the token on multiple occasions. Since the crisis started, Solana has plummeted by over 50%. On the other hand, Ethereum has decreased by roughly 20%, and Bitcoin by about 19%.

Well, if that was not enough, SOL might just have another problem. Investors are preparing for an uptick in selling pressure with the release of 80 million SOL coins from staking contracts. Fortunately, the aforementioned amount was not injected into the market all at once; instead, whales will likely divide it equitably across several trading platforms.

Nonetheless, the result of releasing millions of SOL onto the market causes future selling pressure to inevitably increase. This has led to retail investors staying away from the project. Unfortunately, it is yet unclear if the significant selling volume would be absorbed by a market participant or distributed among individual investors.

Additionally, an increased number of validators closed their positions after the release of the 80 million SOL tokens. This means that market tension will increase tremendously, particularly if SOL breaks down even further.

Will Solana recover anytime soon?

Well, firstly, investors are in a state of fear. And with 80 million free SOL tokens entering the markets, it does not look all too good for the project and its investors. Also, SOL is currently the biggest loser in the weekly charts among the top 100 tokens.

Nothing about the project garners confidence, at least for now. Furthermore, the general crypto markets are at their lowest in years. Recovering from this predicament would undoubtedly take significant time. Moreover, we still do not know the full extent of the FTX contagion, which again will take a few weeks to comprehend.

Therefore, it is too soon to tell if Solana can make a comeback. The industry will most likely go through another period of stagnant growth before making some positive moves.

At press time, Solana (SOL) was trading at $14.59, up by 1.8% in the last 24 hours.