Amidst the turmoil surrounding crypto exchange FTX, there is currently one big loser, Solana (SOL). While the FTT token is at the center of discussions for many market observers after Binance CEO Changpeng Zhao announced to sell all FTT tokens, SOL is seeing a massive -12% drop in price over the last 24 hours.
Even the FTT token is currently posting a loss of just under -3%. So what is driving the SOL sell-off ? Just a few days ago, SOL experienced a massive price spike after Google announced the launch of a Solana validator.
Early Monday morning, SOL fell from its one-month high of $38.78, which it reached on Saturday, to $30.74 on Binance. At press time, the SOL token was trading at $31.34. Today’s sell-off has thus wiped out all gains following the Google news and is now trading -8% on a weekly basis.
Solana A Victim Of The FTX Drama?
The Ethereum community, most notably Eric Conner, core dev of Ethereum and co-founder of EthHub were quick to denounce the supposed “Ethereum killer”. Conner stated via Twitter that it’s “funny as hell” to see the alleged “FTX/Alamada/Solana scam” unfold after two years.
It’s so fucking hilarious watching you all realize the FTX/Alamada/Solana scam 2 years after most of us called it out and got lambasted for doing so.
But words of warning for Solana investors are not only coming from the ETH community. User are wondering if an possible impending FTX implosion will have a cascading effect on SOL.
Pay attention to #Solana , ftx will have to sell to cover expenses. If they are having issues
— the BERG (@ADAMBERGMANshow) November 7, 2022
It was recently revealed that Solana (SOL) tokens are among the more significant assets on FTX’s balance sheet. Bankman-Fried was an early investor in Solana and has drummed up support for Solana several times in the past.
The exchange owns about $3.37 billion in cryptocurrencies, with a large amount being SOL tokens: $292 million in “unlocked SOL”, $863 million in “locked SOL,” and $41 million in “SOL collateral”.
The total of about $1.2 billion in SOL tokens could be a means for FTX to get liquidity and defend the price of the FTT token, which is also the main pillar on FTX’s balance sheet. However, little is currently known about putative SOL selling by FTX. However, the sole relationship between FTX and Solana could be a major drag on the SOL price at the moment.
Thus, pure speculation could also be behind the current SOL dilemma. Backdrop is, as described at the beginning, that FTX has a deep connection with SOL. If there is a prolonged bank run, there is at least a very high probability that the Solana token will also take a big hit.
But, if Bankman-Fried is dumping SOL, it’s definitely not the only altcoin. As on-chain analysts note, other tokens are also affected of the selling pressure by FTX. These coins include CHZ, LOOM, SHIB, LINK, and DYDX.