Solana drops 5% in a day on concerns about continued FTX sell-off, and current traders' short positions see $125 million at risk of liquidation if it recovers as it has in the past recently.
The price drop comes with Solana's Open Interest* dropping 40% over the past 30 days, falling to $1.78 billion on May 9, according to CoinGlass data.
A sharp drop in OI often signals that traders are uncertain about the cryptocurrency and not confident in holding trading positions.
However, Solana has recently had a knack for recovering quickly from declines, which as of now, could jeopardize over a hundred million dollars in short positions.
Over the past 30 days, Solana has seen periods of price drops and recoveries of 5% within 24 hours.
On April 19, Solana saw a similar 5% drop before quickly recovering to $157 within hours, just before the Bitcoin halving on April 20.
Similarly, if the price of SOL increases by 5% to regain the price of $157 on May 7, then $125 million in Short positions will be liquidated.
Solana has a significant amount of short positions at risk if it rises back to $157 | Source: CoinGlass
Just days before SOL's May 7 price drop, crypto trader CryptoAce told his 13,400 followers on X that Solana's price was "in the resistance zone" and correctly predicted that A rejection would result in a drop to $142.50.
However, Solana's most recent decline could be due to FTX claiming that it has enough money to repay the exchange's victims after selling off all its assets - the majority of which were Solana.
This was accompanied by a decline in overall crypto market sentiment, as the Fear and Greed index dropped 13 points over the past 24 hours, falling to 54 on May 9.
However, new findings in the ongoing competition between Solana and Ethereum could also affect its price in the short term.
On May 8, as Bitcoin Magazine reported on claims that the Solana network could be on track to surpass the Ethereum network in terms of transaction fees, this could be a bullish news indicator for the Ethereum killer .
On May 7, the total economic value (including total transaction fees + MEV collected to be returned to network validators) of Solana was 2.8 million USD, almost equal to the total economic value of 3 .1 million USD of Ethereum, according to Smith.
*Open Interest (OI) is the total number of derivative contracts such as options and futures open in the cryptocurrency market. It indicates the level of interest and participation of traders in a particular asset. When OI increases, more new contracts are opened, and when OI decreases, more contracts are closed or expired. OI helps identify changes in capital and market liquidity.
Source: https://tapchibitcoin.io/solana-sol-giam-5-khi-ftx-de-doa-xa-hang-rui-ro-cho-125-trieu-usd-vi-the-short.html
