The eighth-largest cryptocurrency, Solana (SOL), has successfully navigated the turbulent aftermath of FTX’s troubles and is now on a robust path to recovery in 2023. Despite the challenges it faced in the past, SOL has more than doubled in market value on a year-to-date (YTD) basis, marking a significant turnaround for the coin.
Overcoming the FTX Connection
Solana, a prominent player in the crypto space, had been closely tied to the fortunes of FTX (FTT), and the collapse of the crypto exchange in the previous year had serious repercussions for SOL. However, in 2023, the cryptocurrency has left those dark days behind and is showing impressive signs of revival.
SOL’s Remarkable Recovery
Solana’s recovery story is remarkable, particularly when considering its historical lows in the days following the FTX collapse. On a YTD basis, SOL has more than doubled its market value, as reported by CoinMarketCap.
While SOL’s recovery is not directly attributed to FTX, it is worth noting that the disgraced co-founder of FTX, Sam Bankman-Fried (SBF), had given his endorsement to SOL. Some critics speculated that SBF’s involvement may have contributed to the token’s price increase in the early stages of its recovery.
Alameda Research’s Involvement
Alameda Research, an affiliate of FTX, was at the center of the FTX fiasco and held a substantial amount of SOL tokens on its balance sheet. Additionally, other smaller tokens from the Solana ecosystem, such as MAPS and SRM, also had limited exposure to the hedge fund. While these smaller assets were still on the path to recovery, SOL outperformed major market assets like Ethereum (ETH) and Ripple (XRP) in terms of returns on investment, even when weighed against the risk.
SOL’s Resilience and Market Depth
Notably, SOL’s steady rise in value in 2023 has resulted in an improvement in its market depth on exchanges. Furthermore, the cryptocurrency’s liquidity in native units has substantially increased during Q3 2023.
This shift in market sentiment can be attributed to high-profile strategic partnerships, including collaborations with payments giant Visa and e-commerce platform Shopify. These partnerships with traditional finance industry leaders have played a pivotal role in tipping the scales in favor of Solana.
However, it’s important to note that SOL’s recovery is still a work in progress, as the current market depth remains significantly lower than what it was a year ago.
Potential Headwinds for SOL
Solana faces a significant challenge in the form of FTX’s impending liquidation plan. SOL was the largest holding in FTX’s custody, with over 71.8 million tokens. The potential dumping of all these SOL tokens in the market could lead to a decline in price, possibly revisiting the lows witnessed immediately after FTX’s collapse.
In conclusion, Solana’s journey from the shadow of FTX-induced FUD to its current impressive recovery is a testament to its resilience and strength. While there are challenges on the horizon, the cryptocurrency’s strategic partnerships and market performance in 2023 demonstrate its potential to continue thriving in the evolving world of digital assets.
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