The much-anticipated crypto volatility explosion is finally here and signals panic for Solana’s native SOL token.
Digital assets data provider Amberdata shows that the seven-day implied volatility of SOL tokens has ballooned to an annualized 270%, twice as high as Bitcoin’s (BTC) at 135%. This is a measure of Solana’s short-term expected price turbulence. Similarly, SOL’s 30-day implied volatility has spiked to 190% against BTC’s 95%.
In the same way, SOL’s seven-day call-put skew has plummeted to an all-time low of -99%, signifying record demand for bearish puts relative to bullish calls. This is typical of investors who buyouts in anticipation of price slides. Director of Derivatives at Amberdata Gregoire Magadini has noted this spike in implied volatility and commented:
“There is panic in the SOL market.”
Magadini also highlighted the anxiety among traders concerning the value of SOL, acknowledging the potential for massive liquidations. He said:
“SOL is a collateral asset. It will likely be liquidated as FTX/Alameda needs to raise cash…Therefore, the options market is pricing more volatility in SOL vs. BTC.”
Crypto Exposed To Sam Bankman-Fried, FTX, And Alameda Most Affected
This comes in light of the news surrounding Alameda Research, the corporate sibling of distressed exchange FTX, liquidating its Solana holdings, sending SOL price down the drain. According to data on CoinGecko, the token has dropped by over 42% to $17.73 over the last seven days. Moreover, an incoming supply influx appears to have scared investors across the spot and derivatives markets.
FTX founder Sam Bankman-Fried (SBF), also the founder of crypto hedge fund Alameda Research, is one of the early investors of Solana via Alameda Research. This explains why cryptocurrencies exposed to his companies have been the most affected by the recent fallout.
The total value locked (TVL) on the Solana chain has declined by over 30% over the last 24 hours as an aftermath of the news about the potential collapse of FTX, whose effects were felt across the crypto playing field. TVL evaluates the total value of all assets locked in DeFi protocols. An increase in TVL means more coins are deposited within the DeFi protocols, indicating that bulls are in control. A plummeting TVL, however, is a sign that investors are withdrawing their funds from the ecosystem for a particular reason.
Marinade Finance, a Solana-based liquid staking protocol, is the most affected on TVL metrics, plummeting 35.1% to record $115.79 million within 24 hours. Other main protocols on Solana have experienced the same sentiment, with automated market maker Raydium descending 34.25%, liquid staking protocol Lido plummeting 43.13%, and lending protocol Solend recording a 63.07% low.
Additional lending blockchains that have also fallen victim to TVL decreases are Ethereum, BNB Chain, and Tron, down by 10.59%, 9.68%, and 8,84%, respectively, over the same period.
Solana validators in charge of the blockchain’s security are set to unlock almost $800 million of their SOL holdings, which would amount to approximately 5.4% of the token’s entire supply.
Moreover, prolonged token emissions are likely over the near term, which would keep supply-side pressures significant.
Citing a TIE Research note posted on Wednesday, November 9:
“In addition to continued withdrawal of SOL from validators, our emissions & unlock tracking for the token flagged an upcoming core team allocation vesting in 11 days. This unlock represents 2,558,000 SOL coming to market. Emissions will continue at their standard rate of 68,493 SOL/day.”
An expected minimum of an additional 32,214,758 SOL will be available to be sold on the secondary market. According to TIE Research, this number will increase due to more validator deactivation.
Despite the recent turbulence surrounding the SOL token, Solana Labs co-founder Anatoly Yakovenko holds firm to his bullish stance on the Solana network and is undeterred by the recent losses. In a November 9 Tweet, he referred to the quality of builders and recent network-level improvements as big wins, saying:
“I said this on stage at Breakpoint just a few days ago – the builders on Solana are second to none, and the projects they’re building can often only be built on Solana.”
Solana’s price chart shows a bullish momentum and further constant potential. Moreover, the bulls have shown their deterrence and are taking control of the market, hoping for the long term as the market shows signs of change.
The RSI indicator appears to be 37, which shows the crypto’s growing value as it has past the undervalued region. Nevertheless, the RSI score follows an upward movement, which signifies an increasing market while gesturing toward decreasing dynamics. The ascending RSI score indicates buying activity exceeds the selling activity.
SOL/USD Four-Hour Chart
According to this analysis, SOL is expected to have a bright future, as bulls are taking the bears entirely out of the dip, provided the price breaks the market.