A significant action in the world of cryptocurrency has just unfolded. FTX/Alameda has unstaked and distributed 3.03 million Solana ($SOL), worth about $432.5 million, to 37 different wallets.
This move comes just hours before this writing, and the Imminent Act of Distribution (a.k.a. “the IAD”) is causing quite a stir in the community. What was the intention? Is it a preliminary step in a larger plan? Why do it now with so much Solana? The next few hours and days may provide the answers.
FTX/Alameda’s Largest Unstaking Since November 2023
The most recent transaction represents the biggest unstaking event carried out by FTX/Alameda since November 2022. It is a clear indication that the troubled crypto firm might be attempting to make some kind of significant change in the marketplace. This move was timed very closely with the upcoming release of a gigantic amount of Solana tokens that are set to be unlocked in early March.
Since the collapse of the firm, FTX/Alameda has been systematically unstaking and selling off very large amounts of Solana. The recent selling appears to be in line with a strategy that has you guessed it—unsurprisingly—FTX/Alameda offloading Solana. The size of the direct sales to these exchanges has been progressively larger, to the point where since November 2022, 7.83 million SOL, worth an estimated $986 million dollars, has been unstaked and sold off.
The Solana ecosystem, once recognized as one of the fastest-expanding blockchain networks, has been shaken—and not just by the FTX fallout—that we seem to be still in. Dropping from #7 to #28 in market cap over the course of the last half is not something I would take lightly. And the further drop this week, with the unveiling of low price discovery for various FTX tokens, is quite concerning. This undercurrent also seems to be reintroducing the word “solvency” back into some conversations.
A Closer Look at FTX/Alameda’s Activity
Since November 2023, FTX/Alameda has unstaked a total of 7.83 million $SOL, which, based on the average price of $125.8 per token, has translated into nearly $986 million worth of cryptocurrency moved onto the open market. As these Solana tokens hit the exchanges, there has been growing concern about the impact of these large-scale transfers on the price of Solana. Given the volatility of the market and the significant volume of tokens involved, many investors are closely monitoring whether this could lead to additional downward pressure on Solana’s price.
As FTX and Alameda unwind their large unstaked position, the price of Solana fluctuates. Solana’s price seems to move with FTX/Alameda’s large unstaking actions. Unpredictable seems to be the market behavior of the cryptocurrency. But this isn’t an investment behavior investors take lightly. As influential players make substantial moves, submarine market sentiment already teeters, poised to dive any further at negative news. Watching the price movements of Solana and its unwinding position within major exchanges like Coinbase and Binance probably keeps some investors up at night.
This current transaction, that of unstaking 3.03 million SOL, is important for two reasons: its sheer size and the manner in which it’s being conducted. The tokens are being distributed to multiple different wallets—37, to be exact—which serves to give the appearance that the firm is trying to not only obscure the actual path of the funds but also to keep our attention from being drawn to the full picture. This is likely very close to what happened in FTX’s last days when funds were being moved to the exchanges and is an obvious precursor to the funds being made ready for deposit likely on the same major crypto exchanges.
A Broader Impact on Solana and the Cryptocurrency Market
The Solana token release into the market, especially through intermediated structures like the exchanges Coinbase and Binance, has both immediate and long-term implications. In the short term, the sale or movement of large amounts of SOL can cause price fluctuation, creating opportunities for traders as well as long-term holders to capitalize on the market’s inefficiencies. But at what point do the volume alone—and any prior market judgments about how the network’s price will behave in the future—create too many concerns over liquidity and, by extension, stability for the price to regain its previous range?
Starting in March, an additional 11.2 million SOL, worth about $1.5 billion, will be unlocked. This is set to be a major event not just for Solana but for the entire cryptocurrency market. Solana’s focus is expected to sharpen, intensifying the scrutiny of the ecosystem it has built in DeFi. And many are wondering: could this be a disaster waiting to happen? Consider
– FTX and Alameda were heavily involved with Solana.
– What we don’t know is whether the unlocked tokens will be used to stabilizing effect or destabilizing effect.
– The more these tokens are focused upon, the more potential there is for them to be used to fuel market movements.
– Or, in the case of Solana’s much-derided token, further deterioration in value.
The crypto industry is on alert as FTX and Alameda keep unwinding their positions in Solana, with some in the industry worried about what the potential market impact could be and whether exchanges can absorb the massive volumes of tokens. This unlocking of tokens should make for a pretty volatile period for Solana and a great opportunity to watch the movement of Solana. Look for Solana to be in the spotlight in the coming weeks.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.