One altcoin that has been hit hard after the collapse of FTX and Alameda is Solana (SOL). Along with the FTX token, Solana’s native SOL cryptocurrency has come under heavy selling pressure. Last 24 hours for $21.06 at the time of publication. Since the Alameda Crisis erupted last week, the price of SOL has fallen by a whopping 50% in the past five days.
In the past 24 hours, according to data from Coinalyze, there have been nearly $0 million in SOL long liquidations. But why is the contagion spreading from Alameda to Solana (SOL)? Sam Bankman-Fried has reportedly acquired $1.2 billion worth of SOL tokens via Alameda. Industry reports suggest that Alameda sold its SOL holdings and bought FTT to stem the FTX token’s price drop.
In addition, with the recent development of Binance’s purchase of FTX, CZ controls 10% of the tokens. Therefore, investors might think it would be better to back the BNB chain instead of Solana. Sam Bankman-Fried was one of Solana’s key supporters. But with its businesses under water, it remains questionable how long that support will last.
Solana Whale Liquidation
According to network data, a significant sell-off by a Solana whale has driven the price of SOL lower. I was citing data from Solid. Chinese crypto journalist Colin Wu states: Solana Whale (3oSE9CtGMQeAdtkm2U3ENhEpkFMfvrckJMA8QwVsuRbE) is in liquidation and currently has 2,450,418.5 SOL (worth over $51 million) in collateral and 44,871 .609.6 USDC in debt. However, due to the Oracle update, Solana is currently facing an overload.
It is still being determined how far this contagion will spread and how much more SOL will be sold on the open market. Earlier this year, investors in LUNA experienced a similar sell-off. If the panic among retail and institutional investors sets in, there could be a further decline in Solana and the broader crypto space. SOL is currently trading at a 90% discount year-to-date.