- Visa’s USDC settlement boost gives Solana a competitive edge in crypto.
- FTX’s looming liquidation casts a shadow of uncertainty over Solana’s market stability.
- Solana’s price hovers at a critical support level, while resistance at $19.84 could trigger a bullish rally.
Solana’s (SOL) price has recently shown resilience after Visa announced its plans to introduce USDC settlement over the Solana network. However, the market also buzzes with speculation around potential liquidation by the FTX exchange, which holds a substantial amount of Solana tokens.
Last Tuesday, Visa revealed its intention to facilitate USDC settlements on Solana, which increased the cryptocurrency’s price by 4.39% to $20.25. Besides this, other major cryptocurrencies like Bitcoin and Ethereum stayed relatively flat. The announcement is a big vote of confidence in Solana, which many see as a viable Ethereum alternative because of its speed and low costs.
In addition, PayPal USD, its branded stablecoin, went public, lending more legitimacy to the cryptocurrency business.
Adding to Solana’s appeal is Bernstein Research’s prediction that the stablecoin industry would grow to approximately $3 trillion over the next five years.
Solana, though, is shrouded with doubt because of FTX’s shaky standing. The exchange may be compelled to sell its massive stash of Solana tokens to settle its debts. As a result, the crypto market is already displaying symptoms of lower trade volumes, making it more vulnerable to recent news.
FTX, after its financial downturn last November, has made it clear through court filings that it plans to repay creditors in fiat currency. To facilitate this, Galaxy has been entrusted with liquidating FTX’s assets, including a notable chunk of Solana tokens.
The liquidation is capped at $50 million for the first week and can temporarily be increased to $200 million to mitigate adverse impacts on the market.
While the liquidation in a high-volume market would be less concerning, the current low-volume scenario could amplify the effect of this sell-off. Solana’s founder has also expressed concerns, suggesting an alternative of directly distributing Solana tokens to FTX’s customers.
In the previous 24 hours, the price of Solana (SOL) has ranged from a high of $19.84 to a low of $19.22, remaining consistently below the $20 threshold. At the time of writing, the price of SOL was $19.49, down 1.37% from its intraday high. A break of the $19.22 support level may cause SOL to fall below $18.50, a significant psychological milestone for traders to monitor.
However, if SOL manages to break over the $19.84 resistance level, it can surge towards the $20.50 level.
While Visa’s announcement and the growing importance of stablecoins paint a rosy picture for Solana, the imminent FTX liquidation acts as a dampener. Significantly, the market must be more fragile to absorb a large sell-off without substantial impact. Hence, investors must exercise caution and closely monitor these events before moving.
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