Solana Price Dives 35% Amid FTX Estate Unlock, More Selling Pressure Ahead

Key Takeaways

• Solana’s price fell to $160 ahead of the March 1 token unlock.
• Traders expect SOL to face another correction as sentiment is bearish.
• Technical indicators support an extended decline amid weak support.

Despite reaching a new all-time high on Jan. 19, Solana’s (SOL) price has fallen within the last month.

Even though macro external factors like the Donald Trump trade wars impacted this dip, the token’s inability to recover has raised eyebrows.

As of this writing, SOL trades at $160. Interestingly, this downtrend coincides with the upcoming unlock of 11.2 million SOL tokens.

This development has also triggered fresh concerns as the unlock may mean an impending sell-off. Here is how Solana’s price might react as the event approaches.

Solana Traders Brace for Impact

On March 1, Solana will unlock 11.2 million SOL tokens, valued at approximately $1.78 billion. This release is part of the bankruptcy proceedings and is related to the collapse of the 2022 exchange.

Historically, such token unlocks can increase selling pressure and potentially drive prices down when they come into effect. In anticipation, Solana’s price has already dropped 35% over the past month.

With the unlock date approaching, SOL could likely experience further decline.

From an on-chain perspective, Santiment data shows that the funding rate for cryptocurrencies has turned negative. The funding rate is the cost of holding an open position in the derivatives market.

With this metric, one can tell the average sentiment of the market. When funding is positive, it indicates that longs (buyers) are paying shorts (sellers) a fee to keep their positions open, and the broader sentiment is bullish.

But in this case, Solana’s funding rate is negative. This indicates that shorts pay longs, and the average trader bets on Solana’s price to fall ahead of the token unlock.

Should this remain the same, the SOL price might struggle to attract substantial demand to counter the anticipated supply shock. If this is the case, a decline could follow, as stated earlier.

SOL Price Risks Drop to 6-Month Low

On the daily chart, Solana’s price has fallen below the 20-day Exponential Moving Average (EMA), which is a crucial support level. Falling below the 20 EMA (blue) means SOL no longer has strong support to trigger a quick bounce.

Furthermore, the price is on the verge of dropping below the 0.236 Fibonacci retracement level. If validated, the token might risk another correction.

In addition, the Relative Strength Index (RSI) has been on a downtrend since the 35% correction started. This indicates that SOL has not faced any bullish divergence.

If this trend continues, Solana’s price could drop toward $120. Historically, over the last 17 Solana token unlocks, the holder has waited some months before selling.

This causes less selling pressure. However, FTX might not do the same in a bid to meet its short-term obligations. Therefore, a double-digit correction might happen post-unlock.

On the flip side, if demand for the cryptocurrency exceeds this supply, this correction might not happen. Instead, SOL could jump toward $228.13 at the 0.618 Fib level.