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Solana Climbs 10% Despite FTX Liquidation Fears and CPI Impact — Can it Reach $20?

Published September 14, 2023 4:58 PM
Nikola Lazic
Published September 14, 2023 4:58 PM

Key Takeaways

  • FTX to liquidate assets, but the majority of its SOL holdings is staked
  • CPI climbs slightly more than expected but the crypto market is unfazed
  • SOL recovers by 10% and is now at its key resistance

A recent court document from The United States Bankruptcy Court For The District of Delaware, filed on September 9, unveiled that the insolvent crypto platform, FTX, has accumulated assets nearing $7 billion.

Of those, $3.4 billion is in cryptocurrencies, including $1.16 billion Solana (SOL). This revelation startled the crypto space, triggering a downturn in the prices of SOL, dropping by 10% on Monday, September 11, to $17.40. 

Amid the Chapter 11 phase, FTX ensured cash security, adopting an after-petition cash handling approach. The firm effectively weathered the financial storm in Q1 2023, drawing cash from over 30 global banks. This accumulated cash is housed in a primary account, having mainly grown via venture capital realizations and stablecoin swaps.

Come this Wednesday, FTX aims to get the green light to sell off nearly $3.4 billion in cryptocurrencies, a pivotal moment in its bankruptcy journey.

FTX’s SOL Supply is Unsellable? 

Michaël van de Poppe, in a recent X pos t, commented that despite the new CPI data and the court’s approval of FTX’s liquidation, the crypto market should remain largely unaffected.

The analyst highlighted that a significant portion of FTX’s Solana holdings, valued at around $1.2 billion, is staked, making it unsellable. He mentioned that only 7 million SOL are available for FTX to liquidate, and the majority have already been sold over the last week. Van de Poppe foresees a potential “sell the rumor, buy the news” situation.

Regarding FTX’s other crypto assets, van de Poppe noted that the exchange can only liquidate assets worth $200 million weekly. The current market prices were considered when determining this rate, indicating the liquidation might not introduce substantial selling pressure. 

Consumer Price Index (CPI) Higher Than Expected 

In August, inflation recorded its most significant monthly surge this year, with consumers facing elevated costs on energy and various other goods.

The U.S. Department of Labor disclosed  on Wednesday, September 13, that the consumer price index (CPI) went up by a seasonally adjusted 0.6% for August and stood 3.7% higher than the previous year. These figures slightly exceeded the predictions of economists surveyed by Dow Jones.

CPI slightly more than expected
Michaël van de Poppe comments on the crypto market’s reaction to the recent CPI data. Despite August’s inflation rates exceeding expectations, the core CPI remained consistent at 4.3%, down from July’s 4.7%.

Given the U.S. Federal Reserve’s tendency to prioritize core CPI for long-term inflation predictions, van de Poppe anticipates no forthcoming hikes in interest rates.

SOL Price Analysis 

Despite this negative news, the price of SOL has been up by 10% from yesterday and is still in an upward trajectory. 

More upside can be seen

It is currently sitting just slightly below the $19 mark, which is significant as it is about to make its first higher high since the July 14 downtrend. As you can see from the hourly chart above, the price was in a downtrend, which could have ended yesterday. 

If this was the case, we could see a larger recovery to the $22 area and, after a minor pullback, even back above $24. The current interaction is a highly significant one as if a rejection occurs at the current levels, we will likely see another minor lower low compared to the September 13 in which case a target of $16 would look optimal. 

But even in that case, a recovery will be expected above $20 as the price is likely undergoing a larger downtrend and we are about to see its corrective ABC wave develop to the upside. 

At its key resistance

If the price manages to close above $20 on the daily chart, it would strongly indicate that a larger recovery can be seen. This is because if it does so, it would make a breakout above its descending resistance level from mid-August and make a higher local high compared to September 6. 

Conclusion 

Even though the CPI numbers have been higher than anticipated and the FTX has been given the green light to sell their assets, this isn’t as negative as it seems, as Michaël van de Poppe explained. 

Today’s interaction with the $19 price point will show us the needed confirmation, and as we have stated in our analysis, if it manages to stay above it and goes to $20, that would indicate a larger recovery. 

Disclaimer

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

 

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