Solana (SOL) is an altcoin that has been hit hard by the collapse of FTX and Alameda. Just like FTX tokens, Solana’s native SOL crypto has been under heavy selling pressure. SOL’s price has dropped 20% in the last 24 hours to a price of $21.06 at press time.
Since the Alameda crisis surfaced last week, SOL’s price has dropped 50% in the last five days. In the last 24 hours, there has been nearly $100 million in SOL long liquidations according to Coinalyze data.
But why is the Alameda contagion spreading to Solana (SOL)? According to reports, Sam Bankman-Fried acquired $1.2 billion worth of SOL tokens via Alameda. Industry reports suggest that Alameda sold its SOL holdings and bought FTT to contain the falling price of FTX tokens.
Furthermore, with the recent development of the FTX buyout by Binance, CZ controls 10% of the tokens. Thus, investors might think they would be better off backing the BNB chain instead of Solana.
Sam Bankman-Fried was one of Solana’s main supporters. But with his companies in the midst of a crisis, he remains dubious about how long that support will last.
Solana whale liquidation
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, Solana is currently facing congestion due to the update of the oracle. pic.twitter.com/qJKMViJeQK
– Wu Blockchain (@WuBlockchain) November 9, 2022
According to on-chain data, there was a major liquidation by a Solana whale that drove the price of SOL down. Citing data from Solend.fi, the Chinese crypto journalist Colin Wu explains :
The 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, Solana is currently facing congestion due to the oracle update
It is unclear how far this contagion can spread and how many more SOLs will be sold on the open market. Earlier this year, investors experienced a similar sell-off with LUNA. If the panic among retail and institutional investors kicks in, there could be another drop in Solana as well as the broader crypto space. Currently, SOL is trading at a 90% discount year-to-date.