FTX/Alameda’s unstaking of SOL – How will that affect Solana?

• FTX/Alameda’s large unstake and Solana’s U.S Crypto Reserve integration news has fueled mixed market expectations
• Declining social metrics and Open Interest flashed bearish sentiment, while liquidation heatmaps underlined pressure

FTX/Alameda recently made waves in the crypto world by unstaking a significant portion of its Solana holdings—3.03 million SOL, valued at $432.5 million. At press time, Solana [SOL] was trading at $137.20, marking a 13.92% decline over the past 24 hours. 

This large-scale unstake is the biggest one since November 2023, and it has the potential to affect the market. Therefore, investors are closely watching to see if this will cause further price drops or if the market can absorb this massive release without major disruptions.

Will Solana’s integration into the U.S Crypto Reserve boost its market position?

Solana recently garnered attention with its integration into the U.S Crypto Reserve, a move that positions it as a potential player in government-backed blockchain initiatives. With strategic U.S. backing, Solana could attract greater institutional interest, bolstering its appeal in government pilot programs. However, industry leaders have raised concerns about its suitability for such roles. 

For example – Tyler Winklevoss, Co-founder of Gemini, recently stated that assets like Solana, XRP, and ADA are not suitable for a strategic crypto reserve. According to the exec, only Bitcoin meets the criteria for this important role.

Therefore, despite Solana’s new status, its long-term potential in the reserve may face challenges..

SOL’s price action and key levels

Solana, at the time of writing, was testing crucial support levels, with the price recently dropping to $136.88 – An important accumulation zone. Traders are keeping a close eye on this level as it may determine Solana’s next move. If Solana can hold above this level, a potential bounce to resistance levels such as $179.25 may follow. 

However, if the price falls below $133, the next support target will be around $120 – Signaling a possible deeper downturn. The descending trendline seen on the chart adds further pressure to any potential upside, making this a critical period for Solana’s price action.

Source: TradingView

Declining social volume and dominance – Meaning?

Despite the positive news surrounding its integration, Solana’s social volume and dominance have been declining lately. For instance – Social volume fell to just 387, while social dominance dropped to a mere 4.96%. 

This hinted at a fall in public interest and could be a sign that market participants are losing confidence in Solana as a whole.

Additionally, such a decline in social metrics often alludes to lower buying pressure, further complicating the outlook for the token in the short term.

Source: Santiment

What do Open Interest and liquidation heatmaps say?

Solana’s market sentiment has also been negatively affected by a 17.41% fall in Open Interest. This means that right now, fewer investors are willing to place leveraged bets on the token.

The liquidation heatmap revealed significant liquidation zones around the $140 – $150 range. This indicated that if the price continues to drop, many leveraged positions could be liquidated – Amplifying selling pressure in the market.

Source: Coinglass

Can Solana weather this storm?

Solana faces significant challenges ahead. Despite its latest integration, the recent unstaking by FTX/Alameda, declining social metrics, and bearish market sentiments are combining to create a tough environment for the token. 

If Solana can hold critical support levels and absorb the large-scale unstake, it may be able to recover. However, the road to recovery will be challenging, and further price drops remain a strong possibility.