The markets saw an unprecedented crash on Wednesday with leading cryptos plummeting double digits within hours. Bitcoin reached a low of $17,579 and has now shed all the gains that it delivered last year. BTC is now at its November 2020 value after a continuous downturn for 11 months straight this year.
In addition, Solana is among the hardest-hit cryptos today after being hammered by 20% in the indices. SOL slipped to $21 from $30 in the day’s trade and is struggling to stop the bleeding.
SOL is now at its April 2021 lows and has lost all the gains that it generated last year. A majority of holders are underwater and a recovery to its $30 level might not come quickly.
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Why Is Solana Crashing Double Digits Today?
All layer-1 blockchains are bleeding heavily today due to the market crash including Solana, Cardano, Ripple, and Avalanche. While Solana takes the biggest beating of 20%, ADA, XRP, and AVAX are down 7%, 11, and 10, respectively.
So why is Solana crashing down hard? A part of the crash can be attributed to the Binance Vs FTX war that engulfed the crypto space on Monday. The CEO of Binance CZ announced that the company is set to fully acquire Sam Bankman-Fried’s FTX exchange. FTX’s native token FTT fell 80% surrounding the drama of the shocking turn of events.
The event coincided with the news of the insolvency of Alameda Research and a possible sell-off of FTT and Solana tokens. Alameda has major investments in Solana and FTX also supported the Solana ecosystem with their investments. Therefore, the Solana ecosystem has lost a major part of its investments to these giants sending SOL to plunge 20%.
It is reported that Alameda Research holds nearly $1.2 billion worth of SOL in its balance sheets. There is a risk that Alameda might sell off its SOL holdings to stimulate solvency.
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What Could Be SOL’s Saving Grace?
Solana rallied last week after Google Cloud announced a partnership to bring the Blockchain Node Engine to the platform. The partnership will go live sometime in early 2023 to “make it easier for the Solana developer ecosystem to access historical data,” said Google Cloud.
However, SOL has now shed all its Google Cloud ‘announcement’ rally and is left at the mercy of the bear markets. The only saving grace for SOL would be when the partnership goes live in early 2023. However, if the markets remain to be bearish, SOL’s run might be limited as the bears would stunt its growth.
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At press time, Solana was trading at $21.86 and is down 19.3% in the 24 hours day trade. It is also down 91.5% from its all-time high of $259, which it reached in November last year.