One of the most used blockchains in Web 3.0 has seen its capitalization collapse in recent days.
After Luna, another blockchain suffers a major crash in 2022. This time around, however, blockchain activities are not in question. The $ SOL, Solana’s blockchain token, saw its value drop by more than 55% this week. It is currently trading around $ 14. As of November 2021, its value was close to $ 250.
Solana is the blockchain that almost all Web 3.0 users use to buy and sell NFTs, non-fungible tokens, i.e. virtual works of art with a certificate. First of all because it is much faster than Ethereum. Then, because it is also much cheaper. Transactions take place in seconds and cost only a few cents, compared to a few tens or even hundreds of euros on Ethereum. The problem is that the blockchain is less decentralized than its rivals and therefore presents more security risks. You will probably remember that this year Solana had been immobilized for several tens of hours following the saturation of her network. The scenario repeated several times and caused a loss of trust among users.
Like other cryptocurrencies, the $ SOL has obviously suffered the bear market – the bear market – with a natural decline in its price in recent months. The $ SOL was, however, more exposed to this price drop than its competitors for several reasons. First, because interest in NFTs has collapsed. Within a few months, NFT trading volumes were divided by ten. The use of the Solana blockchain, which is highly regarded by NFT buyers and sellers, has therefore naturally decreased.
Then, because unfortunately for Solana, FTX, the second largest cryptocurrency exchange on the planet, had a large stock of $ SOL tokens. This explains the massive sale in recent days. The $ SOL token has actually experienced a double price drop than most other tokens in the past 48 hours. Alameda Research, a trading company related to FTX and its founder, had a huge stock of $ SOL. According to analyst firm Kaiko, $ SOL was the second most represented token in Alameda Research’s portfolio, which would have nearly a quarter of the $ SOL reserve.
And the bloodbath could continue as many investors who had bet on their cryptocurrencies will have access to their shares again and will be able to resell them on the market. Coindesk then reported Wednesday that many investment funds would likely reduce their exposure to the token in the coming days and that nearly $ 1 billion of $ SOL would be “unlocked” on staking platforms.
While it was once in the top 10 most popular cryptocurrencies, the $ SOL token has dropped in the rankings on Coinmarketcap. It currently ranks only in fourteenth position and has a capitalization of “only” 5 billion dollars. Just five days ago, its market capitalization exceeded $ 11.5 billion.
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