SOL Token Surges Despite FTX Bankruptcy Sell-Off
The native token of Solana, SOL (SOL), saw a remarkable 22% increase on November 10, surpassing the $54 mark for the first time since May 2022. This surge occurred despite ongoing sales of SOL tokens by FTX’s bankruptcy estate, with the Delaware Bankruptcy Court approving the sale of 55.75 million SOL in September 2023.
Investor optimism about SOL’s price rise may be due to some of the tokens from the bankruptcy proceedings being either vested or locked, along with a weekly sale limit of $100 million imposed as part of the FTX liquidation plan. Initially feared as asset liquidation, investors now see minimal impact from these sales.
FTX has been selling between 250k-700k $SOL every day for the last 2 weeks while price has either been going up or sideways.
so far its been getting absorbed like a champ and at current rate their unlocked tokens should be depleted within a week.
once this seller is gone i can… pic.twitter.com/AtnTqz3uxG
— Bluntz (@Bluntz_Capital) November 9, 2023
An independent analyst on X (formerly Twitter) described SOL’s resilience during the FTX bankruptcy token dump as impressive, adding a bullish case for SOL once these tokens are depleted.
SOL Price Driven by Leverage Longs Demand
The substantial 39% weekly gains have driven SOL’s futures open interest to $745 million, representing the highest level since November 2021. However, it’s important to consider SOL’s funding rate to gain a more nuanced perspective, which currently represents a 0.5% weekly cost for leverage longs.
While derivatives markets may have fueled SOL’s rally, there’s also evidence of growth in terms of deposits and DApps usage within Solana’s ecosystem.
Growth in Solana’s Ecosystem
Solana’s total value locked (TVL) has reversed its declining trend after six consecutive weeks, with DApps deposits seeing a recent increase. The network now ranks as the fourth-largest blockchain in decentralized finance (DeFi) TVL and has experienced a surge in activity while competitors faced declines.
Assessing SOL’s Sustainability and Valuation
Despite its recent rally, investors are questioning the sustainability of SOL’s bull run above $54. While there is no excessive leverage demand observed in SOL derivatives contracts, the fundamentals suggest limited room for further upside.
Hot Take: Evaluating SOL’s Continued Growth
Solana’s impressive rally amidst FTX bankruptcy sell-off and sustained demand for leverage longs indicate promising prospects for continued growth. However, questions about sustainability and valuation linger as investors assess the potential for further upside against market fundamentals and competition from other networks like Polygon and BNB Chain.
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