Solana’s 520% Gain in One Year Raises Concerns

The price of Solana has surged by 520% in just one year, but there are still signs that make investors feel uneasy.

Solana’s Astounding 520% Surge In A Year Raises Concerns Amid Liquidity Disparity_65b970aab7372.webp

Solana (SOL) has experienced a remarkable ascent, with its value surging over 520% in the past year, currently trading above $50, a stark contrast to its dip below $8 following the collapse of FTX, a now-defunct crypto exchange, and Alameda Research, a trading arm associated with FTX and a major player in the crypto market.

While Solana enjoys a “blistering” rally and achieves new 2023 highs, concerns arise regarding the imbalance in liquidity, particularly when viewed in native unit terms. The term “native unit” in this context refers to the base unit of account for the currency, which is SOL in this case. Analyzing market depth using native units provides insights into the coin’s relative liquidity without the need for conversion into other denominations, such as USD or BTC.

As of November 14, at a 1% market depth, Solana’s liquidity in USD terms is reported to be at its highest level since the FTX collapse. However, when assessed using native units as a liquidity gauge, the coin faces challenges, reaching its lowest point since the FTX incident.

solanas astounding 520 surge in a year raises concerns amid liquidity disparity 65b970aab99f8

The aftermath of the FTX collapse had profound implications not only for SOL and its native tokens but also for the broader crypto markets. The fear of contagion following the bankruptcy of the Sam Bankman Fried exchange in November 2022 led to a significant drop in SOL prices, accompanied by a decline in Bitcoin (BTC) prices, which failed to act as a perceived safe haven.

By November 2022, Bitcoin had experienced a flash crash below $16,000, and Solana plummeted from highs of $220 to as low as $8. This downturn also impacted Solana’s liquidity adversely.

solanas astounding 520 surge in a year raises concerns amid liquidity disparity 65b970aac1269

Examining SOL’s liquidity in native units reveals that it has yet to fully recover and may require more time, despite the overall optimism within the Solana communities. According to Kaiko, market makers seem inclined to maintain stable liquidity for SOL, even amid surging prices in USD terms.

Related: Ripple Price Analysis: Bulls Remains Active Near $0.64

Presently, SOL prices remain steady above $50 but show signs of a potential cooldown in the upside momentum, with a series of lower lows in lower time frames. This suggests that SOL traders might be exiting their long positions. Nevertheless, the $38 level, marking the highs of November 2022, remains a crucial point for technical analysts.

(100 votes)

5.0/5

(100 votes)

Latest

Crypto Market Faces Volatility Ahead Of Trump Tariff Pause Expiration

News | Editor Choice | Policy & Regulations

Crypto Market Faces Volatility Ahead of Trump Tariff Pause Expiration

The crypto market is entering a sensitive phase as the Trump tariff pause nears its end and nearly $15 billion in Bitcoin options are set to expire, putting significant pressure on investor sentiment.

Pi Coin Faces Selling Pressure Ahead Of Pi2day

News | Editor Choice | Pi Network

Pi Coin Faces Selling Pressure Ahead of Pi2Day

Ahead of the Pi2Day event on June 28, Pi Coin is under strong selling pressure while Pi Network announces a series of new updates, including the KYC Sync feature and upgrades to the Pi Browser aimed at improving user experience and accelerating the transition to Mainnet.

Bitcoin Could Drop To $100,000 Soon

Bitcoin | Editor Choice

Bitcoin Could Drop to $100,000 Soon

Although Bitcoin has surged following the stabilization of the Middle East situation, it could still fall below the 100,000 USD mark in the near future.

Coinbase Stock Hits New High As Analysts Split On Future Rally

News | Altcoin | Editor Choice | Policy & Regulations

Coinbase Stock Hits New High as Analysts Split on Future Rally

Coinbase (COIN), the crypto exchange giant, has just set a new all-time closing high, despite growing concerns that the stock may be due for a short-term correction.

Ai Crypto App Users Double This Year

Editor Choice | Altcoin

AI Crypto App Users Double This Year

According to a report from DappRadar, there are approximately 4.5 million wallets using AI applications on the blockchain, marking an 86% increase this year.