Solana, having reached an all-time high earlier this year, now faces challenges with the upcoming release of 11.2 million coins during the FTX bankruptcy process. This could exert significant pressure on the token's price.
Preparing for a Major Sell-off
The impending release of 11.2 million SOL coins on March 1 raises concerns among investors. Historically, large-scale unlocks have been accompanied by price downturns. Solana's funding rate turning negative, as indicated by Santiment, suggests an expectation of further declines, possibly highlighting the dominance of short sellers. Escalating selling pressure could make Solana's recovery increasingly difficult. Should buyers fail to generate sufficient demand, prices could fall further.
Potential for a Six-Month Low
Technical analysis warns of heightened risk for Solana's price. On daily charts, SOL dipped below the 20-day EMA, potentially paving the way for a new downward trend. There's a possibility of falling below the 0.236 Fibonacci retracement level, possibly declining to $120. The downward trend suggested by the RSI indicates weakening bullish sentiment. With urgency to sell quickly to settle FTX debts, a double-digit drop becomes more likely.
Solana's Future: Expectations vs Reality
If demand exceeds supply, prices might unexpectedly rise, reaching $228.13. However, under current conditions, the likelihood of a decline seems greater. The decisions made by large investors during this period will play a crucial role in the future movement of the price.
Solana stands at a critical juncture. The impact of the coin unlock could significantly affect its market value. However, the outcome largely hinges on the balance of market demand and supply.
