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Solana price plunge: End of SOL without FTX and Alameda support as Binance Smart Chain waits in wings

By Raphael Sanis

Edited by Charlie Mellor


Updated

Solana's logo on a bearish price graph
FTX had invested more than $1bn in Solana’s cryptocurrency – Photo: Shutterstock

The future of Solana (SOL) has been thrown into question after FTX’s bankruptcy and the collapse of Alameda Research – both major investors in the Solana blockchain.

Over the past year, Solana has raised funds from the FTX exchange and its former CEO Sam Bankman-Fried’s trading firm Alameda Research.

However, when Binance pulled out of its planned takeover of FTX it spooked investors, as it would mean the end of suppoort for SOL.

Despite Binance citing due diligence issues for its decision, SOL is now struggling after losing key investors.

SOL to USD

Early SOL investor

Alameda Research was an early investor in Solana and contributed to its private token sale in 2021, when the blockchain raised $300m from various private investors. This round was led by Andreessen Horowitz.

Bankman-Fried’s companies continued to work with the Solana blockchain. In March 2022, FTX collaborated with CoinShares to deliver a Solana-based exchange traded product (ETP). This new product shared Solana staking rewards with investors.

FTX was also a significant investor in the SOL cryptocurrency – its balance sheet included SOL worth more than $1.1bn, according to CoinDesk.

However, after the Binance deal was retracted, FTX filed for Chapter 11 bankruptcy and announced it would be closing all of its services.

FTX’s downfall

FTX’s investment in and influence over Solana could now, however, be backfiring on the blockchain.

Before the Binance deal was withdrawn, Ran Neuner, a CNBC crypto trader, highlighted that the agreement would give Binance CEO Changpeng Zhao control over 10% of all SOL tokens.

Neuner tweeted: “And he would rather support BNB chain than SOL.”

BTC/USD

69,950.35 Price
+0.140% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.54 Price
-1.230% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.17 Price
+0.680% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

ETH/USD

3,761.24 Price
+0.250% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

Neuner raised another point that is still relevant following Binance’s U-turn. After the collapse of FTX and Bankman-Fried’s trading firm, Neuner noted: “Solana just lost all the support and investment” from FTX and Bankman-Fried.

However, Solana is losing more than just potential funding from FTX. In a recent epoch, Solana validators unlocked more than 30 million SOL and flooded the market, according to Solana Compass.

Serum’s demise

Serum, a Solana-based decentralised finance (DeFi) protocol, has also been under fire. Investors have shown concern over the protocol as it is another product created by Bankman-Fried.

Users are now migrating from the DeFi platform and is total value locked (TVL) has plummeted from $121m on 6 November to just $400,000 at the time of writing, according to DeFi Llama.

The downfall comes as FTX reported an apparent hack, with the cryptocurrency exchange investigating $473m of lost funds. The news appeared to have shaken the confidence of Serum investors.

Anatoly Yakovenko, Solana founder, said Serum developers have forked the code to free the protocol from FTX.

SOL’s plunge

SOL’s price has plummeted in recent days as investors jumped ship following the news about FTX. It opened at $36.77 on 6 November and then stooped to a low of $12.51 three days later. 

As of 14 November 2022, SOL was trading at $14.19, down nearly 55% on the previous week.

The price collapse is having major consequences for larger SOL investors. A solana whale has been reported to be on the brink of liquidation as it holds more than $44m in debt.  

However, at the time of writing, SOL had seen $615,000 liquidated in the past 24 hours, which was $5.7m less than BTC and $9.2m less than ETH, according to CoinGlass.

Markets in this article

SOL/USD
Solana / USD
182.6709 USD
3.4821 +1.960%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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