Solana's Boom: Is it a road to bust? We explore the possible dangers ahead
Solana has been causing some significant waves throughout the crypto currency sector having bounced back to near all time highs. The token is on everyone’s lips as it’s price continues to skyrocket.
But it’s not the only token to be smashing new numbers on the SOL blockchain, it has many people asking how? What? And Why? But I believe there are more concerns on the horizon and as we break down some of the recent movements for the chain, the picture might begin to paint itself.
A recent surge of ANALOS which is a Solana backed token witnessed a trader turning USD 900 into a staggering USD 3.47 million over just five days.
This unprecedented success has fuelled excitement within the Solana community However, amidst the euphoria significant risks present themselves primarily tied to FTX which owns a substantial stake in Solana and is contemplating a sell off.
analoS USD900 to USD 3 Million
The ANALOS token backed by Solana has experienced a remarkable surge with a 148.05% price increase over the past 24 hours currently trading at USD 0.00203 (at time of writing). The trader behind this meteoric rise identified by the wallet converted USD 900 into USD 3.47 million by trading ANALOS on the Solana network.
Despite the impressive profits already realised the trader continues to sell ANALOS holding 1.12 billion coins as per on-chain data by Lookonchain
This surge in ANALOS price coincides with the upward trajectory of Solana, which has witnessed a 2.50% price increase in the past 24 hours, reaching $111.31. The correlation between the two tokens has sparked optimism for their future, backed by on-chain data highlighting positive market trends.
Beneath the surface of Solana's success there are concerns that are brewing over FTX's significant holdings of Solana tokens. With a valuation of USD 3.99 billion FTX's 73% SOL holdings comprising 40.5 million tokens are currently under lockup and set to be released gradually according to a vesting schedule. This large stake has positioned FTX as a major influencer on Solana's market dynamics.
Recent data reveals that only 27% of FTX's total Solana holdings have been unlocked with speculations that 13.22 million SOL may have already been sold. [
Back in November this year FTX was sending SOL to Binance causing a dip]( https://www.coindesk.com/markets/2023/11/06/sol-drops-5-as-ftx-estate-transfers-tokens-to-binance-kraken). Now there is news that 5 million tokens valued at USD 3.99 billion are set to be gradually released with 609,000 SOL unlocking monthly and larger tranches unlocking in 2025. The potential sell off of such a significant stake raises concerns about its impact on Solana's market stability.
Current Risk
Solana, amidst these speculations and risks has managed to dethrone BNB to become the fourth largest crypto currency by market capitalisation. With a 100% monthly gain for SOL holders the token's market capitalisation has surged to USD 47 billion even outperforming BTC and ETH in trade volume on major Centralised Exchanges (CEX).
While Solana's price crossed the USD 100 mark hitting USD 125.19 on December 24, questions continue to linger about its decentralisation. Critics argue that Solana, despite its impressive performance falls short in terms of decentralisation compared to Ethereum.
With the recent proposal by FTX debtors for a separate deal with Sam Bankman-Fried the former CEO over the acquisition of Embed is continuing to add another layer of complexity. The proposed settlement focusing solely on the claims related to Embed and aims to recover 100% of the value.
FTX's bankruptcy in November 2022, followed by Sam Bankman-Fried's conviction on seven felony charges has left lingering uncertainties. The proposed settlement though specific to Embed, contributes to the ongoing saga of FTX's bankruptcy proceedings.
Financial Trap
Solana's recent surge and growth in the crypto market are undeniably impressive perhaps too impressive especially for a token that is majority owned by one company who is seeking to regain funds to pay out debts. The clouds of uncertainty loom large.
FTX's substantial stake in Solana that are set to be gradually unlocked adds a layer of risk to the ecosystem. The potential sell off of a considerable portion of Solana tokens by FTX could have profound implications for the market's stability.
Investors must tread cautiously and consider the intricate details at play. As Solana continues to increase in value and way out performing other assets, people need to really think about what’s at stake and who is pulling the strings.
Once FTX get’s it’s all clear to sell off the tokens or reopen this could put a lot of people at risk of financial loss if the company chooses to offload it’s assets to repay it’s debts. Or perhaps there is knowledgeable backroom discussions with FTX planning on retaining the mass holdings and re launch.
Either way, there is a lot at stake and investors must beware.
Image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.
Posted Using InLeo Alpha
