SOL’s revival could be delayed despite Solana Foundation’s latest declaration
- The Solana Foundation claimed that the asset trapped on FTX was less than 1% of Solana’s funds
- The Foundation also stated that all SOL tokens bought by Alameda had unlock schedules
Ever since the FTX saga began, rumors have been rife around Solana. This was due to the fact that Solana’s early investors included Alameda, FTX’s investment arm. Anatoly Yakovenko, the Solana co-founder, tweeted briefly to indicate that they were not exposed.
However, the tweet did more harm than good by creating more questions than it answered. However, in a recent publication, the Solana Foundation detailed the extent to which they were vulnerable to FTX. What’s the verdict: excellent or bad?
Locked Funds on FTX less than 1%
According to a recent release from the Solana Foundation, the organization had almost $1 million in cash or equivalent assets on FTX as of 6 November. This was right before the exchange ceased processing customer withdrawals.
The Foundation claimed that the asset represented less than 1% of Solana’s total funds. The Chapter 11 bankruptcy filing by FTX and its affiliated entities, however, rendered those assets inaccessible off the platform. The assets’ availability for withdrawal would be conditional on the outcome of the bankruptcy case.
SOL Locked as FTX Assets Decline
The Solana Foundation also stated that Solana owned roughly 3.24 million shares of common stock in FTX Trading LTD. Furthermore, it owned 3.43 million FTT tokens, and 134.54 million SRM tokens from Project Serum’s decentralized exchange (DEX).
In 2020, Bankman-Fried established the DEX in Solana. Following the saga, the value of the FTT token fell precipitously, dropping by almost 50%. The Serum project was about to be forked after the FTX hack made it vulnerable. Additionally, the value of the SRM token also decreased. This meant that assets tied to FTX and Alameda held by Solana had lost value significantly.
Over 50.5 million SOL, valued at $708 million, were purchased from the Foundation by the cryptocurrency trading company Alameda Research. Although until 2028, a large amount of that SOL was restricted by monthly unlock schedules. Additionally, Solana Labs sold Alameda Research 7.56 million SOL, even though it was likewise locked until 2025.
Exposure to FTX also affected roughly $40 million in Sollet Assets, which are wrapped versions of major cryptocurrencies, such as Bitcoin and Ethereum that were backed by the exchange. In addition to disclosing this information, the Foundation also revealed that the current status of the underlying assets was uncertain.
SOL in a 12-hour Timeframe
A 12-hour timeframe analysis of SOL’s price movement revealed a considerable fall in the asset. The price range tool indicated that it lost 62% of its value since the start of the drop at the time of writing, based on the current price range. The chart indicated that March 2021 was the last time it reached that point.
There was a lot of selling pressure, as evidenced by the volume indicator, which further pulled the price down. The asset was still very much in the oversold range, but a rebound was visible using the Relative Strength Indicator (RSI).
There were signs that suggested SOL would bounce back, though it may take a while. This, however, hinged on the fact that no additional horrible information will be revealed, as the release of such news could cause panic and a further decline in value.
Up to you Investors…
There was already a bear trend in the market before the FTX news hit, but it was bolstered by the announcement. In its statement, the Solana Foundation tried to distance itself from the mess that FTX has created. However, it is ultimately up to the investors to decide whether or not the foundation’s efforts have been successful.