Solana, one of the prominent cryptocurrencies in the market, saw a sharp drop of 5% due to concerns about FTX’s sell-off plan. However, this downturn was quickly followed by a rebound, increasing the possibility of liquidation of about $125 million in short positions.
Solana Holdings Decline
Solana’s SOL open interest (OI) has dropped 40% over the past 30 days, falling to $1.78 billion on May 9. A drop in OI typically signifies market uncertainty and traders’ reluctance to take positions on the Solana cryptocurrency.
Despite recent market turmoil, Solana has shown a tendency to recover quickly from declines, posing a threat to existing short positions. Over the past month, Solana has rebounded by 5% within 24 hours multiple times after facing price declines.
SOL price is inside the resistance box, it is time to watch if it consolidates here or rejects, rejection will pull it back to $148 and possibly below $142.5, the next 24 hours will be crucial as to whether the market structure maintains an uptrend
Factors behind the price drop
However, the recent drop in Solana’s price can be attributed to FTX’s announcement that it plans to sell assets to compensate victims of its collapse. Given that Solana accounts for a large portion of these assets, the announcement could have a notable impact on market sentiment.
Additionally, broader market sentiment has also taken a downturn, with the Fear & Greed Index plunging 13 points over the past 24 hours to hit 55 on May 9.
Solana Surpasses Ethereum
Recent reports suggest that Solana’s transaction fees could surpass Ethereum, which is also influencing its short-term price action. The potential for dominance in this regard is seen as a positive indicator for SOL’s future price outlook.
Despite the decline, Solana’s market cap surged to $64 billion.
(Personal opinion, not a recommendation)
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