In brief
Solana (SOL) has jumped 33% in value since hitting a recent low under $13 on Wednesday amid FTX’s collapse.
The Solana Foundation opted not to unstake 28.5 million SOL overnight amid fears of the market impact
The Solana ecosystem is in crisis this week, as the price of SOL fell sharply—shedding more than half of its value in a day—as the market responded to the collapse of crypto exchange FTX. But fears that Solana’s destruction would only accelerate overnight into Thursday did not pan out. Instead, the price has rebounded sharply.
SOL currently sits at about $17, according to CoinGecko, marking a 38% surge after hitting a low under $13 on Wednesday afternoon. It rose almost as high as $19 earlier this morning, but has eased off of that 24-hour peak.
Solana is currently still down 43% over the last week, significantly outpacing the losses of Bitcoin, Ethereum, and others—but it has regained a lot of ground over the past several hours. The market is broadly up today due to October’s CPI report showing cooling U.S. inflation, but Solana’s pop today is larger than most.
This may come to a surprise to anyone who took the temperature of Solana’s ecosystem on Wednesday. As the price continued to crash, apparently amplified due to Solana’s close ties to FTX and its founder Sam Bankman-Fried, the network’s founders and prominent builders tried to rally supporters who feared a death spiral in the making.
“Chewing glass is in our DNA, and we’ll get through together,” tweeted co-founder Anatoly Yakovenko on Wednesday. Fellow co-founder Raj Gokal described the FTX collapse and rippling effects as a “crucible moment” for the Solana ecosystem. Both tried to keep supporters focused on the network’s long-term vision amid the immediate fear and despair.
On top of the existing losses, there was reason to be fearful of more overnight. As of mid-afternoon on Wednesday, more than 56.3 million SOL—about $729 million worth at the time—was set to unlock from staking overnight, potentially flooding the market and pushing SOL’s price down further with sell pressure.
However, the figure was halved when the Solana Foundation announced late Wednesday afternoon that it would not unstake 28.5 million of that SOL, which had been previously delegated to network validators that German cloud provider Hetzner recently banned from its service. Instead, the Solana Foundation restaked its stash of SOL.
Amid sniping from Twitter users about it being another example of alleged “centralization” on Solana, Austin Federa—head of communications at the Solana Foundation—tweeted that its delegation program “had the worst timing imaginable,” and that the unstaking would be “rescheduled because A Few Things Happened Recently.”
Even so, over 31 million SOL was ultimately unstaked as investors regained access to their funds. CoinGecko’s market data shows an 11% drop in price ahead of the unlock, likely due to fear over the impending event—but it didn’t fall much further than that. Within a few hours, SOL’s price was flying again, to the relief of investors and builders alike.
…in order to restake to validators operating in alternative locations, which took effect at epoch 370. While 28.5M SOL was in the process of being unstaked during this epoch, the plan to unstake has now been postponed, and all 28.5M SOL have now been re-staked.
— Solana Foundation (@SolanaFndn) November 9, 2022
Solana die-hards may have used the opportunity to buy up SOL after falling Wednesday to the lowest price it’s seen since March 2021. Some whales in the space, such as noted pseudonymous NFT investor SOL Big Brain, had tweeted signals that they planned to place large buy orders as the staking unlock potentially flooded the market with low-priced SOL.
Which OTC desks are the best to buy SOL in size at tomorrow after the epoch unlock? Asking for a friend.
— S◎L Big Brain (33.3%) (@SOLBigBrain) November 9, 2022
There are also signs of life around DeFi on Solana. Jupiter, an aggregation platform, has handled over $253 million worth of activity over the past 24 hours, spanning 719,000 total transactions. And Solend finished liquidating the holdings of a whale user, which had threatened the lending protocol as it contended with congestion issues on the platform.
While Solana has thus far weathered what some believe to be an existential threat, the situation around FTX is still evolving. The crypto market may weather continued shocks as FTX attempts to find a path to solvency and aid customers who locked up potentially billions of dollars’ worth of crypto in the exchange.
On Tuesday, Binance said that it had signed a non-binding letter of intent to acquire FTX following the latter firm’s liquidity crunch. However, on Wednesday, Binance pulled out citing the magnitude of FTX’s problems. Since then, Bankman-Fried has said he will try to raise money to save the company and make customers whole.
However that shakes out, more revelations and crypto industry aftershocks are likely as the market endures the unraveling of one of its biggest players. Solana has taken some of the hardest hits so far this week—but at least for now, the ecosystem is persevering.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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