Original author: 1912212.eth, Foresight News
On March 1, 11.2 million SOL from the FTX bankruptcy auction will be unlocked, worth $2.06 billion. The number of unlocked tokens accounts for about 2.29% of the current SOL circulation supply.
With such a huge selling pressure and the sluggish market, the price of SOL is quite sluggish. Since January this year, when Trumps TRUMP concept coin triggered a market frenzy, SOL hit a record high of $295, and then fell all the way. The weekly line has fallen for four years, with the lowest price dropping to around $160. Is it Solanas turn to be FUDed?
This article will explore the impact of this event from multiple perspectives, including unlocking background and potential market impact.
Background of FTX bankruptcy and SOL unlocking
FTX bankruptcy is one of the most iconic events in the history of cryptocurrency. In 2022, the former industry giant collapsed due to a broken capital chain and mismanagement, and then entered bankruptcy liquidation procedures. As an early investor in the Solana ecosystem, FTX and its affiliate Alameda Research hold a large number of SOL tokens. FTX holds a total of about 41 million SOL, most of which are locked and unlocked between 2025 and 2028. In order to repay creditors, the FTX bankruptcy management team sold these locked tokens in advance through auctions, and attracted the participation of institutional investors at a significantly discounted price.
The 11.2 million SOL unlocked this time are part of the previous auction. The main institutions involved in the purchase include Galaxy Digital, Pantera Capital and Figure. Among them, in 2024, Galaxy purchased 25.52 million SOL at a price of US$64 per coin, Pantera and others purchased 13.67 million at US$95, and Figure and others purchased 1.8 million at US$102. These institutions bought at a price far below the market price at the time. Even if the price of SOL fell to around US$170, the book profit was still considerable.
Potential impact of selling pressure
11.2 million SOL is equivalent to 2.29% of Solanas current circulating supply (about 488 million), worth more than $2 billion. For an asset with a daily trading volume of usually between $1 billion and $2 billion, this influx of unlocked tokens could undoubtedly cause market turmoil. If these tokens are sold quickly, the oversupply in the short term could depress the price of SOL, triggering panic selling by investors, thereby exacerbating the downward trend.
The extent of the market impact depends on the behavior of holders after unlocking. The buyers of these tokens are mostly experienced institutional investors who bought them at low prices in the auction and have already made considerable book profits. If they choose to cash out immediately after unlocking, the selling pressure will increase significantly. But from another perspective, these institutions have held their positions for months or even years during the lock-up period, showing a certain willingness to invest in the long term. Matt Maximo, an investor at VanEck, once revealed that some buyers he knew clearly stated that their goal was to pursue higher returns rather than short-term arbitrage.
In addition, SOLs recent price performance also provides some clues to market sentiment. Since FTX went bankrupt, SOL prices have soared from a low of $22 to the current level of over $170, an increase of more than 700%. Despite the recent market correction, the overall trend still shows strong support.
What are the chances of a market panic?
Whether the selling pressure will trigger market panic depends largely on investors psychological expectations and market environment. Some users expressed concerns about the unlocking, believing that the $2 billion selling pressure may break through the trend line, causing prices to fall further. However, there are also views that the 2.2% increase in circulation is relatively limited, and most SOL has already changed hands many times in the market, so the actual impact may be exaggerated.
SOLBigBrain, a crypto KOL who bought the token at around $20, said that a portion of it has already been factored into the price. Although some people will choose to sell after unlocking, SOLs narrative and momentum are still quite strong.
Currently, some funds and KOLs on social platforms are generally optimistic about the performance of SOL’s price this year, and quite a few even believe that SOL will exceed US$700 this year.
From historical experience, large-scale unlocking events do not always lead to market crashes. For example, when FTX was approved to sell $100 million in crypto assets per week in 2023, the market did not fall significantly, but gradually absorbed the selling pressure. On January 7, 2021, SOL unlocked 362 million tokens, accounting for 55.7% of the maximum supply. At that time, the price of the coin was around $3, and it hit a historical high of $259 in November 2021.
Generally speaking, the negative effects of unlocking will ferment one month before the official unlocking, and after the unlocking is completed, the negative effects will be exhausted, and there may even be a rebound at some point. Take ONDO as an example. It had a huge unlocking in mid-January this year. It has been falling since it hit the top in December 2024, but after the official unlocking, there was no so-called panic selling or other market behaviors. Instead, the currency price continued to fluctuate within a certain range. This time, although the SOL unlocking scale is larger, the institutional attributes and high profit buffers of the participants may weaken the motivation to sell.
Solana’s fundamentals remain strong
The fundamentals of the Solana ecosystem itself also resist potential risks to a certain extent. As a high-performance public chain, Solana has attracted a large number of developers and users in recent years with its low transaction costs and high throughput. In the past year, Solana has been highly sought after and cheered by the market with its meme wave and AI concept coins, and its on-chain wealth effect has also attracted many users to flock to it.
According to solscan data, the total supply of USDC on the chain has reached 9.6 billion USDC and 2 billion USDT, and the number of PYUSD has also risen to around 150 million. The number of independent address holders has also reached 3,288,566, and the total number of active staked SOLs has reached 390.2 million. Although the number of active wallets has declined, it still remains at a high level.
The number of new accounts also remained high.
in conclusion
In general, the unlocking of SOL worth more than $2 billion on March 1 will undoubtedly cause a certain degree of selling pressure on the market, but the possibility of triggering a full-scale panic is relatively low. The rational decision-making of institutional investors, the markets digestion capacity, and the resilience of the Solana ecosystem will all be key factors in buffering this impact. For investors, paying attention to price trends and changes in trading volume after unlocking, and formulating strategies based on their own risk tolerance, will be the best way to deal with this event. In the ever-changing arena of cryptocurrency, opportunities and challenges coexist, and the story of SOL is clearly not over yet.
