The cryptocurrency market is tanking after a wild few days. Turmoil ensued after Binance, the largest cryptocurrency exchange, signed a letter of intent to buy rival FTX, as rumors swirled regarding the solvency of FTX and how any deal could affect users.
What’s more, the question of whether the apparent deal between Binance and FTX will actually close has ravaged markets further—especially impacting the tokens dubbed “Sam coins” by those within the crypto community, referring to FTX CEO Sam Bankman-Fried.
Among such “Sam coins” is Solana’s SOL, which as of Tuesday afternoon was down some 40% over the last 24 hours, and 50% in the last week. SOL is currently trading around $14.
SOL has been massively propped up by FTX and Bankman-Fried over the years, as both have helped Solana gain traction and visibility. Most notably, SOL is also the second-largest holding for Alameda, a trading shop founded by Bankman-Fried, representing about 10% of Solana’s market cap. This has stoked fear, because if Binance captures such a sum of SOL, many have speculated that the exchange would prioritize its own tokens, pushing SOL further into the ground.
“Solana has a rough couple of days ahead of it. The immediate concern is that a lot of SOL could be sold off in the next 48 hours, as nearly 19 million tokens hit the market with Epoch 370, and those holders look to avoid any additional losses,” Dexterity Capital cofounder Michael Safai tells Fortune, referring to swaths of folks un-staking SOL. “There’s also the pressure that could come from borrowers potentially liquidating Solana to shore up balance sheets or meet demands from creditors.”
However, many analysts tell Fortune that it’s too soon in the potential acquisition process to make any “fact-based analysis” about the situation and potential long-term effects for Solana.
“Given the SOL price decline, it’s likely [that] a lot of that 10% has been liquidated in an attempt to raise capital,” Messari senior research analyst Tom Dunleavy tells Fortune.
As for whether worries of total demise for Solana are overblown, “longer-term, Solana has a much more vibrant ecosystem of developers, second only to Ethereum,” Dunleavy adds.
Currently, sources close to the Solana team tell Fortune that the focus internally continues to be moving forward and building, adding that any rumors circulating now are just that.
Solana cofounder Anatoly Yakovenko tweeted that Solana Labs “didn’t have any assets on ftx.com, so we still have tons of runway, and luckily still a small team. Runway is in $, ~30 months at current burn. Learned our lessons in 2018.”
Runway is in $, ~30 months at current burn. Learned our lessons in 2018
— toly 🇺🇸 (@aeyakovenko) November 9, 2022
“SOL is probably suffering more from its direct association with SBF at the moment than any gloomy longer-term prospects,” Dexterity Capital's Safai added. “It’s looking possible that this FTX-Binance deal won’t happen, which could eliminate the question of whether or not BNB Chain will benefit. The industry will have a better lay of the land when we can look months or even weeks ahead, but right now everyone is taking things by the hour.”
