Stablecoin volatility and upcoming FTX repayments may further disrupt Solana’s price action as traders anticipate the outcome of a key technical chart pattern.
Investors’ shifting stablecoin positions on the Solana network, combined with a critical chart pattern, are setting the stage for increased volatility in Solana’s token price.
Trading activity involving Tether’s USDT on Solana’s transport layer saw “extreme” swings, suggesting that traders may be repositioning their holdings in search of new opportunities.
According to a report from global payments platform Mercuryo, USDT trading on Solana surged over 137% in the last week of February, following a 61% drop the previous week. The report, shared with Cointelegraph, highlights a sharp increase in trading activity that could drive further volatility for SOL.
“This level of frenzied activity suggests that the chain is becoming more volatile,” said Petr Kozyakov, co-founder and CEO of Mercuryo. However, he pointed out that Solana’s fast transaction processing, high scalability, and active trading ecosystem could help stabilize the market.
“Decentralized exchanges (DEXs) on Solana, such as Jupiter and Raydium, have been key drivers of this heightened activity,” Kozyakov added.
Technical Pattern Signals Potential Breakout
A developing technical chart pattern could play a decisive role in Solana’s price action.
“Solana’s Heikin Ashi hourly chart shows a converging triangle, which could lead to either a bullish or bearish breakout,” noted pseudonymous crypto analyst Trader Tardigrade in a March 19 post on X (formerly Twitter).
Memecoins and FTX Repayments May Limit SOL’s Upside
Solana’s price action is also being influenced by the recent surge in memecoins and the ongoing FTX repayment plan.
Kozyakov explained that the bankrupt FTX exchange’s upcoming repayments could create additional selling pressure on SOL.
“FTX’s repayment plan involves distributing a large volume of SOL tokens to creditors, which could result in increased selling pressure,” he said.
On March 4, wallets linked to FTX and Alameda Research unstaked $431 million worth of SOL — the largest token unlock since November 2023, according to Cointelegraph.
However, FTX may not be able to offload all the tokens immediately due to court-imposed restrictions. A Delaware Bankruptcy Court ruling in September 2023 allows FTX to sell digital assets weekly through an investment adviser, with a cap of $50 million in the first week and $100 million in subsequent weeks. The limit could increase to $200 million per week with court approval.
FTX’s next repayment round is scheduled for May 30. Under the recovery plan, 98% of creditors are expected to receive at least 118% of their claim value in cash. In May 2024, FTX estimated that the total value of distributions would range between $14.5 billion and $16.3 billion.
