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Solana (FLOOR) lost 60% of its market value in a week due to its market exposure FTX crypto exchange now defunctwhich could continue to haunt the “Ethereum Killer“well in the future.

FTX/Alameda Expo Night at Solana Price

FTX and its sister company Alameda Research are likely to control more than 50 million SOL, according to Solana. statement released on November 10.

FTX entities received 4 million SOL from the Solana Foundation on August 31, 2020. They also started receiving a portion of 12 million SOL from September 11, 2020 and nearly 34.52 million SOL from September 7, 2020. January 2021, via a “linear monthly unlock mechanism”.

Summary of SOL sales to FTX/Alameda Research. Source: Solana Laboratories

Additionally, FTX entities began receiving portions of a 7.5 million SOL reserve from Solana Labs on February 17, 2021. Notably, a transaction worth 62,000 SOL between the same entities is not not settled.

Most of the SOL tokens pledged to FTX/Alameda are acquired, which means that the company does not have them in custody yet but is likely to receive them thanks to the linear monthly release mechanism. The last of these unlocks will occur by January 2028.

This leaves the market with interpretations on what might happen to SOL tokens once they are unlocked, given FTX bankruptcy filing this may freeze any remaining funds.

Also, the firm would have has liabilities of $9 billion against a balance sheet of $1 billion, which could prompt its trustees to liquidate its SOL holdings to repay debtors.

To avoid such a scenario, Solana could make technical changes to its token economy, thereby reducing the impact of FTX. A recent governance proposal submitted on November 13 presented a few options that could be on the table, including:

  1. The erroneous allocation is burned.
  2. Increase the blockage to 10 years on the wandering allowance.
  3. Airdrop from all SOL token holders except the party holding the erroneous allocation.
  4. A combination of the above.

Rebound in SOL price relief?

From a technical standpoint, Solana is showing signs of a bullish divergence between its price and its Relative Strength Index (RSI).

A bullish divergence occurs when the price of an asset forms lower lows but its momentum indicator forms a higher low. Traditional analysts see this as a buy signal, which may lead to a rally in the short-term SOL price on its daily chart.

SOL/USD daily price chart showing bullish divergence. Source: Trading View

SOL/USD could rally towards $18, its range resistance level, in the event of a short-term rally. In other words, a rebound of 20%.

Related: Serum Liquidity Hub Bifurcated by Developers After FTX Hack

But on the longer-term charts, SOL could see a further drop towards $2.50, an over 80% decline, in 2023, based on a giant head and shoulders pattern shown below. below.

SOL/USD weekly price chart with head-shoulder breakdown pattern. Source: Trading View

Interestingly, the token’s downside target is in its voluminous range, according to its Volume Profile Visible Range, or VPVR, indicator.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.