With FTX currently staring down the barrel of bankruptcy after “misusing” roughly US$8 billion in client funds, Solana, a blockchain that had high exposure to the now-defunct exchange, was expected to see its price plummet as investors rushed in records numbers to unstake their SOL.
In typical crypto fashion, the exact opposite happened.
The price of Solana has surged more than 35% this morning following a record unlocking of more than 31 million SOL tokens last night. Typically, massive unlocks like this usually mean that investors are looking to sell their tokens, but the market responded positively following a surprise announcement from the Solana foundation saying that they would postpone their plan to unstake some 28.5 million tokens.
Size-wise, this unlock represented nearly 9% of the token’s total supply and is one of the largest amount of tokens ever to have been unlocked during a single “epoch”. On the flip side, just 1.9 million SOL tokens (US$29 million) were scheduled for staking.
Solana – how its doing
Solana has now regained a significant amount of ground on its weekly losses, but is still down nearly 50% for the week, with SOL being one of the largest holdings on the books of the now defunct FTX. While there’s no guarantee that the price of SOL will suddenly plummet because of its exposure to FTX, it’s worth approaching any investments into FTX-related tokens with a healthy dose of caution.
While the term “epoch” seems complicated, it simply refers to the amount of time it takes for a blockchain network to process a certain amount of transactions. For Solana an epoch typically takes between two and three days.
The recent price action from Solana is a classic example of crypto volatility. Many market observers expected the price of Solana to plummet as SOL was one of the largest holdings on the books of Alameda Research, the sister hedge fund of the now insolvent crypto exchange FTX. However, in a classic example of crypto craziness, SOL did the exact opposite, rallying on the back of the Solana Foundation’s announcement.
What are other tokens doing?
It’s not just Solana that’s witnessing heightened volatility. The fallout from FTX has resulted in wild swings in prices of cryptocurrencies across the board. Bitcoin (BTC) has spiked 12% in the last 24 hours, with Ethereum (ETH) up more than 20% as well. It’s worth noting that while prices are temporarily rebounding, all of the tokens associated with wallet addresses from FTX and Alameda Research may yet see further unpredictable swings in their price.
Independent researchers from the crypto analytics service ‘Look on Chain’ details a number of tokens held by Alameda and FTX including: Serum (SRM), Optimism (OP), Polygon (MATIC), Metamask (MASK), Sandbox token (SAND) and Fantom (FTM).
Again, investors should approach anything with major ties to beleaguered exchange with extra caution in the coming days. The financial contagion from FTX could spread far further than analysts are capable of predicting.
To that point, “His Excellency” Justin Sun took to Twitter to reassure his 3.3 million followers that his blockchain network TRON (TRX) is working to limit their exposure to the exchange. Sun said that trading for TRX on FTX had been reestablished and that the team is currently working on a withdrawal strategy for TRX holders that stored their tokens on the FTX exchange.
