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Crypto: What future for Solana after its mixed performances?

Fri 10 May 2024 ▪ 3 min of reading ▪ by Luc Jose A.
Trading

Affected by a recent announcement from FTX regarding the auction of its SOL holdings, Solana is showing a very unattractive performance. A 5% loss in value in one day is a harsh blow for the cryptocurrency. Now, the world of traders is on high alert. The 125 million dollars in short positions currently open could be closed as soon as the price of SOL returns to its previous level. However, bullish signs remain. Let’s discuss.

La crypto SOL  de Solana

Open Interest in Solana Drops by 40% Over the Last 30 Days

Viewed as a valid competitor to Ethereum, the SOL cryptocurrency had raised a lot of hope among traders. On May 7, Solana generated $2.8 million in transaction fees, compared to $3.1 million for Ethereum. On May 8, transaction fees on Solana exceeded those of Ethereum.

However, even though many had bet on SOL, traders are now less enthusiastic, considering the recent fluctuations in its price. Indeed, according to data from CoinGlass, on May 9, the open interest in Solana dropped to $1.78 billion, a 40% regression over the last 30 days.

This drop in the cryptocurrency happened on the day when FTX announced its readiness to reimburse creditors’ funds following the sale of its SOL holdings. The announcement affected the overall market sentiment, as on the same day, the crypto fear and greed index moved from 13 to 54. Clearly, investors are losing confidence in Solana.

Solana: $125 Million in Short Positions in Danger

When we take a look at the evolution of SOL over the past 30 days, we notice that the cryptocurrency has a good capacity for recovery. It has sometimes lost 5% of its value before rebounding within the same period.

For example, on April 19, just hours before the Bitcoin halving, it had lost 5% of its value before quickly rising to 157 dollars. But while its ability to recover quickly is a positive feature, the frequency of its price fluctuations does not sit well with traders who are now afraid of incurring losses.

If the price of the cryptocurrency climbs back to 157 dollars, there is a risk that the nearly $125 million of short positions currently open will be closed. It will therefore be necessary to stay alert, because if this happens, the price of the cryptocurrency could fall further, unless the institutional demand for SOL continues.

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.