Solana Declines Over 41% Amidst FTX Collapse

Solana has been having a rather bad week. Data from CoinGecko shows that over the previous week, the 15th largest crypto in terms of market cap has shed about 41.2%.

On November 9th, the native token of the Solana blockchain called SOL stood at a value of $20.16, but it dropped to $14.24 at the time of writing.

This is the worst performance for a token this week amongst the top 100 cryptocurrencies in terms of market cap.

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The losses

Considering the price action this week, Solana has plunged almost 94.5% from its all-time high back in November 2021 at $259.96.

Solana is recognized as a layer-1 blockchain that runs on the proof-of-stake (PoS) algorithm and is used for developing non-fungible tokens (NFTs) and decentralized finance (DeFi) applications.

It has been dubbed as the Ethereum killer because it is a direct competitor of the blockchain, but its title is now hanging in the balance after the FTX collapse, as it was one of its biggest supporters.

As far as the monthly performance is concerned, the value of the SOL token is down by almost $8.5 billion, as it lost almost half of its value in this time span.

More numbers

Messari also released data showing that the daily trading volume of the SOL token also nosedived to $196 million in the last week from $1.31 billion, which is an 85% decline.

This was due to investors moving away from the asset. The asset can become insolvent if there is a decline in trading volume.

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Data from Coinglass shows that the last 24 hours have seen Solana futures positions worth $89.474 million liquidated.

49.94% of the total positions that have been liquidated were actually long trades and they carried a value of about $44.69 million.

The downturn

It is not just Solana’s exposure to FTX that has resulted in the token’s downfall, but also because of a drop in activity of Solana-based NFTs

Early this year, non-fungible tokens (NFTs) made a significant contribution to the success of the network.

Nansen revealed data showing that there was a 33% drop in the number of weekly users on various Solana-based NFT platforms, as they fell to 81,811 from 122,410.

While Solana has taken the hardest hit, the crypto market, in general, has also been down in the last week in the wake of the FTX downfall.

There was an 8% decline in the overall market cap of the crypto industry, as it was close to $883 billion. There has been a 9.7% decline in Bitcoin in the past week, while Ethereum has lost 7.5%.

Many companies have announced their exposure to FTX and are mostly evaluating the impact it would have on their operations in the long run.

For instance, crypto lender BlockFi is reportedly considering filing for bankruptcy, as it has lost FTX’s support. It has also reached out to Binance for assistance.

Many other platforms have also halted withdrawals because of the impact of the bankruptcy.