With the collapse of FTX and Alameda Research, Solana is one of the most affected altcoins, hitting a new local low of $10.
Solana ($SOL) hit new lows this morning on investor concerns that institutional holders of the token could be preparing to offload large amounts in order to save some of their investment.
All this fear, uncertainty, and doubt (FUD) over Solana is taking place amid a crypto winter that shows no sign of ending, making it very conducive for funds and investors to take any profits they might have, or indeed for many to just cut their losses.
Loss of confidence
Since early November $SOL has fallen off a cliff, losing 74% of its value in just under 3 months. The lack of confidence in the token since the FTX debacle has caused investors to sell $SOL even harder than most other cryptocurrencies, even though the Solana ecosystem was arguably the foremost layer 1 blockchain after Ethereum.
Very worryingly, the odd project is jumping ship off the Solana ecosystem and into other ecosystems with perhaps perceived lower risk. DeGods, and Y00ts are two NFT projects that have recently announced their desire to leave Solana and port over to the Polygon ecosystem, the leading layer 2 blockchain for Ethereum.
From a technical aspect, things do look slightly alarming for $SOL holders. $10 dollars can certainly be a support level that is able to stop the rot from continuing. The support here goes back to February 2021, and of course, $10 is a nice round number.
However, should the FUD persist and the $10 support breaks to the downside, the next step down, with nothing but thin air below, could take the token down to the next very strong support between $4 to $5 dollars.
This would be quite some collapse since the November 2021 high of $260 when everything appeared to be going so well for Solana.
Make or break
For the time being, investors will have to weigh up their options. Getting in at $4 to $5 could be the most incredible opportunity if the ship rights itself and the lightning fast network eventually fulfils all its early promise.
On the other hand though, should not even $4 hold, and the current bank run-like sell-off continue apace, then it could spell the end of an incredibly innovative project in the crypto space.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.