FTX’s new plan causes Solana to plummet by 5% before a swift recovery eliminates $125M in short positions.

Solana experienced a 5% drop in its price in just one day, raising concerns about a potential sell-off on FTX. Traders currently have $125 million at stake if the cryptocurrency were to bounce back, as it has done in the past. CoinGlass data shows that Solana’s open interest (OI) has also decreased by 40% in the last 30 days, reaching $1.78 billion on May 9. This decline in OI indicates that traders are uncertain about the cryptocurrency and are hesitant to take positions on its price. However, Solana has shown a tendency to recover quickly from its price dips, which could put over $100 million in short positions at risk. Over the past month, Solana has seen instances where its price dropped by 5% but recovered within 24 hours. For example, on April 19, the price dipped by 5% before quickly bouncing back to $157, just before the Bitcoin halving on April 20. If Solana’s price were to rise by 5% and reach its May 7 price of $157, $125 million worth of short positions would be liquidated. Recently, pseudonymous crypto trader CryptoAce predicted that Solana’s price would drop to the $142.50 level, and this prediction turned out to be accurate. However, Solana’s recent price decline may also be attributed to FTX announcing that it had enough funds to repay victims of the exchange’s collapse, with a significant portion of those funds being Solana. Additionally, the overall sentiment in the cryptocurrency market has decreased, as indicated by a 13-point drop in the Fear and Greed Index score over the past 24 hours, reaching a score of 54 on May 9. In the ongoing competition between Solana and Ethereum, new findings suggest that Solana’s network may be on track to surpass Ethereum’s network in transaction fees. This could be a positive indicator for Solana’s price in the short term. On May 7, Solana’s total economic value was close to Ethereum’s total economic value, with $2.8 million and $3.1 million respectively. It’s important to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any decisions.