Investors’ stablecoin strategies within the Solana network, coupled with a crucial technical chart pattern, suggest that the Solana token may experience increased volatility, potentially leading to a pivotal moment in its pricing dynamics.
The trading of Tether’s USDt (USDT) on Solana’s transport layer exhibited “extreme” volatility, which might signal that traders are adjusting their positions in pursuit of fresh investment avenues.
During the last week of February, USDT trading on Solana’s transport layer saw an astounding 137% spike, following a 61% drop in the week prior, as noted by a global payments infrastructure platform.
These fluctuations in stablecoin trading activity indicate an unprecedented level of engagement that could imply heightened volatility for the Solana (SOL) token, according to an industry executive.
This “frenzied activity” might suggest that the network is more susceptible to fluctuations, the executive explained further, adding that Solana’s inherent advantages—such as rapid transaction processing, enhanced scalability, and a vibrant trading ecosystem—could also play a role in this volatility, particularly against a backdrop of an ecosystem that at times attracts significant trading volumes.
Importantly, decentralized exchanges (DEXs) on Solana, like Jupiter and Raydium, have sparked considerable interest, the executive noted.
In addition, an emerging technical chart formation may play a crucial role in determining Solana’s price movements shortly.
A crypto analyst mentioned that the Solana Heikin Ashi hourly chart illustrates a Converging Triangle, indicating that either upward or downward trends could materialize.
While some analysts indicate that the ongoing memecoin craze may be diverting liquidity from the Solana token, a variety of other factors are also affecting SOL’s price behavior.
One significant element is the repayments from the bankrupt FTX exchange, which may impose constraints on Solana’s price trajectory. The executive highlighted that the failed FTX exchange has initiated a distribution strategy that involves allocating a substantial number of SOL tokens to creditors, which could translate into selling pressure.
On March 4, FTX and Alameda Research-linked wallets saw the unlocking of $431 million worth of SOL tokens, marking the largest SOL token release since November 2023.
Even though FTX and Alameda have unlocked considerable amounts of SOL, the companies might not be in a position to sell all the tokens in one go. The Delaware Bankruptcy Court had approved a plan allowing FTX to liquidate digital assets while enforcing strict limits on how much can be sold at once.
Under this court ruling, FTX is permitted to sell digital assets on a weekly basis with an initial cap of $50 million in the first week, increasing to $100 million in the following weeks. Should FTX wish to sell more, it must seek court approval to increase the limit to $200 million weekly.
The next set of repayments is scheduled for May 30. Per FTX’s recovery plan, it is anticipated that 98% of creditors will receive at least 118% of their claim value in cash, with total distributions projected to range between $14.5 billion and $16.3 billion by May 2024.