Solana’s Remarkable Price Surge
If you look at the daily chart, it’s clear that Solana (SOL) has been on a remarkable upward trajectory. The coin is currently trading above $50, which represents a 520% increase over the past year. This surge comes after SOL plummeted below $8 in the wake of the collapse of FTX, a defunct crypto exchange, and Alameda Research, a leading crypto market maker.
Concerns About Liquidity
Despite this blistering rally, there are concerns about the liquidity of SOL. According to Kaiko, a crypto analytics platform, there is a significant disparity in liquidity when measured in USD terms versus native units. Liquidity in native units is crucial for gauging the relative liquidity of the coin without needing to convert it to other denominations.
Kaiko’s analysis reveals that while Solana’s liquidity in USD terms is at its highest level since the FTX collapse, its liquidity in native units is at an all-time low. This suggests that despite the optimism surrounding Solana, its liquidity has not fully recovered from the FTX collapse.
Impact of FTX Collapse on SOL
The collapse of FTX had a significant impact on SOL and its native tokens, as well as the broader crypto markets. Following FTX’s bankruptcy in November 2022, SOL prices plummeted, triggering fear of contagion across the entire market. This fear also caused Bitcoin prices to decline, undermining its perceived role as a safe haven asset.
As a result of this contraction, Solana’s liquidity suffered and has yet to fully recover. Kaiko suggests that market makers are maintaining stable liquidity for SOL despite its soaring prices in USD terms.
Solana price trending upward on the daily chart | Source: SOLUSDT on Binance, TradingView
Current Price Trends and Analysis
Currently, SOL prices are holding steady above $50 and continue to trend upwards against the USD. However, lower time frames show a series of lower lows, indicating a potential cooling off of upside momentum and possible exits by long positions. Technical analysts are closely watching the $38 level, which marks November 2022 highs and will be a critical reaction point for SOL traders.
Hot Take: Solana’s Liquidity Challenges Persist Despite Price Surge
Despite Solana’s impressive price surge, concerns about liquidity persist due to disparities between USD terms and native units. The impact of the FTX collapse continues to affect SOL’s liquidity, and market makers appear cautious despite soaring prices in USD terms. As SOL traders closely monitor price trends and key resistance levels, it remains to be seen whether liquidity will fully recover from the aftermath of the FTX collapse.
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