CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Solana short interest: SOL price has struggled recently, will the so-called Ethereum killer’s downtrend continue?

By Alejandro Arrieche

Edited by Vanessa Kintu

14:05, 30 November 2022

Solana coin with an Ethereum coin behind it that is slightly blurred against a black background
What does the stability of the Solana short interest indicate about the future of this crypto asset? Photo: Rcc_Btn / Shutterstock

The value of the native token of the Solana network (SOL), has dropped by nearly 93% so far in 2022. The crypto ecosystem has taken a large toll amid a deterioration of the macroeconomic backdrop and multiple sector-specific negative developments.

The implosion of what was one of the most successful brokerage firms in the space, FTX, has caused the latest sharp drop in the value of crypto assets and the Solana price has not been spared. 

In November alone, the SOL price dropped by almost 58%, sitting at $13.81 a token as of the 30th of the month. 

Despite this latest sharp drop, Solana short-selling activity has not experienced a significant uptick during this same period as indicated by the SOL long/short ratio compiled by Coinglass, which stood at 1.05 as of 30 November.

SOL long/short ratio 30-day chart

What does the stability of Solana short interest indicate about the future of this crypto asset? In this article, we share further details about this Web3 project, the latest performance of its native token SOL, and the most recent developments that have affected the SOL price.

What is Solana (SOL)?

Solana is a layer-one blockchain designed to power decentralised applications (dApps) through the use of smart contracts. The project was conceived by Anatoly Yakovenko in 2017 and its development is overseen by Solana Labs and the Solana Foundation.

This decentralised network was created to compete with Ethereum (ETH), an earlier project of similar scope and reach created by crypto pioneer Vitalik Buterin. The Solana blockchain is powered by a proof-of-history (PoH) consensus protocol, which supports timestamps to speed up the verification process.

Solana offers something Ethereum lacks – the possibility of scaling cheaply. To achieve this, the network was designed to process over 4,000 transactions a second at an average cost of $0.00025.

According to data from SolScan, the circulating supply of SOL currently stands at 363.23 million tokens while the total supply is 534.82 million coins. The token does not have a maximum supply.

What is your sentiment on SOL/USD?

158.7234
Bullish
or
Bearish
Vote to see Traders sentiment!

Solana short interest remains stable despite November’s share drop

Data from CoinGlass indicates that Solana short interest increased significantly on 31 October when 61.9% of the transactions were short sales. However, the ratio of long-to-shorts, which, to some extent, indicates market sentiment, has remained relatively stable since then, moving in a range between 0.8 and 1.2 thus far in November.

DOGE/USD

0.12 Price
-3.190% 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

3,414.11 Price
-0.110% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BTC/USD

63,844.85 Price
-1.130% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

BCH/USD

378.10 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

On 15 November there was a noticeable spike in the short interest in Solana as the long/short ratio fell to 0.79. This may have happened as news about the collapse of FTX spread quite fast and rattled market participants.

Despite the sharp drop that the token experienced in November, the fact that the Solana short interest ratio has remained relatively range-bound indicates that market participants are expecting that the token may have hit bottom already or that it will soon.

Latest news about Solana

SOL historical performance chart

On 9 November, the Solana Foundation published the blog post “Solana Ecosystem Facts Related to FTX Bankruptcy” to inform the public about the project’s exposure to the failed crypto broker.

According to the team, the network has not experienced any issues resulting from the implosion of the company formerly headed by Sam Bankman-Fried. However, the leadership team noted that Solana had $1m in cash with FTX as of 6 November, when the company halted all withdrawals. They clarified that this amount accounted for less than 1% of the foundation’s cash reserves. 

On the other hand, the Solana Foundation had other assets including 3.24 million common shares of FTX Trading LTD, 3.43 million FTT tokens and 134.54 million SRM tokens held on FTX.com accounts. These assets have been frozen there as the broker ceased processing withdrawals for customers on 6 November.

If you’re considering investing in Solana, it’s important to keep in mind that cryptocurrency markets are extremely volatile, making it difficult to accurately predict what a token’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts can and do get their predictions wrong.

We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. And never invest more than you can afford to lose.

How you invest is a personal decision depending on your risk tolerance and investing strategy. You should do your own research to take an informed view of the market and decide whether SLP is an appropriate fit for your portfolio.

FAQs

What is Solana’s maximum supply?

The Solana token does not have a maximum supply. According to data from SolScan, the token’s total supply stood at 534.82 million as of 29 November, while the circulating supply sat at 363.23 million coins.

Who invented Solana?

Solana was created by Anatoly Yakovenko in 2017. Since then, the project’s development and growth have been fostered by two organisations: Solana Labs and the Solana Foundation.

Will Solana crypto go up or down?

Nobody can predict with 100% accuracy if the price of a given asset will rise or decline during a certain period. Investors are encouraged to perform due diligence on any asset they would like to invest in to determine if they could be undervalued from a fundamental standpoint or if the price action and trading volumes may indicate that the price could be poised to rise or decline in the future.

Markets in this article

ETH/USD
Ethereum / USD
3414.11 USD
-3.87 -0.110%
SOL/USD
Solana / USD
158.7234 USD
1.2259 +0.780%

Related topics

Rate this article

Related reading

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.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading