Solana Down 93% from ATH as Concerns Grow Over Alameda Exposure
Solana (SOL) is down more than 93% from the all-time high it reached in November 2021. The token plunged significantly on Wednesday due to its links to Alameda Research and the latest bailout move by Binance to overtake FTX following its liquidity crunch.
Solana Plunges Almost 40% on the Binance-FTX Bailout Deal
Solana (SOL) plummeted nearly 40% Wednesday to $18.2 following a shock announcement by Binance that it is buying rival FTX in a bailout move that made the ongoing crypto winter even colder. Following the drop, SOL is now down over 90% from the all-time high it hit during the crypto boom in 2021.
Another factor that contributed to Solana’s latest downturn is its high exposure to Alameda Research, a crypto trading firm owned by Sam Bankman-Fried (SBF), also the CEO of the collapsed FTX. There were speculations that Alameda was attempting to offload its SOL holdings to secure fresh liquidity.
“The large amounts of SOL and Solana ecosystem tokens held by Alameda could get sold off in a worst-case scenario and underline the close links between FTX/Alameda and Solana.”– Riyad Carey, a research analyst at Kaiko.
However, the token’s losses widened after unexpected reports that Binance, the world’s largest crypto exchange, signed a non-binding LOI to acquire FTX amid a liquidity crunch at the Bahamas-based crypto exchange. The takeover represents a bailout move after FTX saw $6 billion in withdrawals in just 72 hours.
Prior to the takeover announcement, Binance CEO Changpeng Zhao put pressure on FTX after he said in a tweet on Sunday that Binance plans to liquidate its holdings of FTX’s native token FTT due to “recent revelations.” While Zhao did not specify what revelations he was referring to, the majority think that he was alluding to reports that Alameda’s balance sheet was inflated by the FTT token.
Join our Telegram group and never miss a breaking digital asset story.
Solana’s Google-related Gains Obliterated
In response to Binance’s move, SBF initially tweeted that “FTX is fine” and reassured investors that the crypto exchange “has enough to cover all client holdings.” But quickly after that, things took a turn for the worse, and FTX, one of the biggest crypto exchanges, is likely being rescued by Binance.
“It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns, and Binance, their biggest rival, is coming to their rescue.”-Dan Raju, CEO of Tradier.
Just days ago, SOL rallied higher after Google Cloud announced it has become a validator for the Solana blockchain. But all of those gains were eradicated in a matter of hours following the latest developments in the Binance-FTX saga, adding to Solana’s 2022 woes.
Do you think the latest developments could prolong the ongoing crypto bear market? Let us know in the comments below.