Solana Flying, Bulls Reverse Post-FTX Collapse Losses But SOL Analysts Cautious

SOL, the primary currency of Solana, is one of the top-performing coins in the top 10, according to CoinMarketCap, a crypto tracker. According to data on October 31, SOL is changing hands above $36, trending at 2023 highs, reversing all post-FTX collapse, which saw the coin tumble to as low as $8 in Q4 2023 before recovering steadily over the past 11 months to spot rates.

Solana Flies 150% To Reverse Post-FTX Losses

At present prices, SOL is up more than 150% from November 2022 lows. At this pace, SOL is outpacing Bitcoin (BTC) and Ethereum (ETH), whose prices have also rallied by over 100% from 2022 lows. 

Solana price on October 31| Source: SOLUSDT on Binance, TradingView

Looking at the daily chart, SOL is within a bullish breakout formation, trending above the July 2023 high of around $32. Notably, the leg up is with rising trading volume, suggesting that optimistic traders possibly support the uptrend. 

Besides expanding trading volume, bull bars are riding the upper Bollinger Bands (BB), diverging from the middle BB, indicating that the uptrend momentum is also high and may support prices. BB is a technical indicator for measuring price volatility. Whenever either band diverges from the middle BB, the underlying volatility is high, as with Solana at spot rates.

The bankruptcy of FTX triggered the SOL plunge in November 2022. The exchange was one of the most popular before collapsing after it emerged that its founder, Sam Bankman-Fried, had misappropriated user funds. 

Bankruptcy Trustee Free To Sell SOL, Why Did They Stake?

FTX, through its subsidiaries, was one of the largest holders of SOL. Therefore, when FTX filed for bankruptcy protection at the United States Bankruptcy Court for the Southern District of New York in early November 2022, it had a ripple effect on the broader Solana ecosystem, forcing SOL prices lower. 

FTX holds roughly 16% of the SOL outstanding supply worth over $1 billion and over $500 million BTC. According to a ruling by the Bankruptcy Court for the District of Delaware in September, FTX can begin selling and investing its crypto holdings to repay creditors.

In mid-October, the FTX estate staked 5.5 million SOL. According to on-chain data, coins were staked via Figment, a platform leveraged mainly by institutional investors. 

By staking SOL, the FTX estate, which a bankruptcy trustee manages, is bullish on the coin since it has the option, as directed by the court, to liquidate it at any time. Moreover, by staking, the estate will receive more SOL. 

Even so, Nansen’s report on October 31 shows that the FTX estate unstaked 1.6 million SOL. It remains unclear if they will be sent to exchanges for liquidation, potentially lowering prices.

Feature image from Canva, chart from TradingView

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