A storm brews over Solana (SOL) as a $2 billion token unlock looms, sparking debates among traders. The sixth-largest cryptocurrency by market cap grapples with fallout from the LIBRA memecoin scandal, which erased $4.3 billion in hours and drew political controversy. With bearish technicals and fears of mass sell-offs, investors now question SOL’s short-term viability.
The Unlock Drama
Several institutional giants stand to profit from Solana’s upcoming unlock. Galaxy Digital, Pantera Capital, and Figure Markets acquired SOL tokens through FTX bankruptcy auctions at $64 per token, which is a steep discount to current prices. Analysts estimate these firms could net $3 billion, $1 billion, and $150 million, respectively, if they sell post-unlock.
Meanwhile, crypto commentators like artchick.eth and RunnerXBT warn of risks. Last month, artchick.eth highlighted that 15 million SOL (worth $7 billion) will flood markets by April, compounding existing inflation-driven supply. “Another $1 billion in SOL could be dumped via inflation alone,” she cautioned.
$7 Billion Unlock Schedule
According to Solana’s token release plan, February kicks off with 4.8 million SOL ($960 million) entering circulation. March triples this volume, unleashing 12.5 million tokens ($2.5 billion) purchased cheaply by institutions. By April, cumulative unlocks will total 15 million SOL, per blockchain data.
Galaxy Digital’s managing director, Kelly Greer, downplayed concerns, noting the unlock represents just 2.31% of SOL’s total supply. “Daily trading volumes exceed $3.6 billion,” Greer argued, suggesting markets could absorb the sell pressure. However, critics counter that panic selling could amplify downside risks.
Short Sellers Circle as Sentiment Sours
Futures markets reveal growing bearish bets. Open interest for SOL surged 40% in 48 hours, while funding rates are increasingly gravitating toward negative territory. This is a clear sign that shorts dominate.
“This is SOL’s largest OI spike ever,” warned HORSE, a former prop trader. The shift accelerated after SOL broke below $190, a key psychological support level. Technical analyst Deftsuo, however, called the FUD “overblown,” citing Solana’s upcoming Firedancer upgrade and potential ETF applications.
Technical Charts Flash Warning Signs
SOL’s price slid 30% in four weeks, partly pricing in unlock fears. However, losing the $180 support zone could trigger a steeper drop. This plunge is likely to stay between $155 – $168 if bearish momentum persists. This range was last tested in November 2023.
Another red flag emerges on the daily chart: SOL closing below its 200-day exponential moving average (DMA) for the first time since October 2023. A sustained break below this level often precedes extended downtrends, potentially validating short sellers bets.
Community Views
Retail investors voice unease on social platforms. “Unlocks and pump-and-dump schemes make SOL risky,” tweeted one trader, likening Solana’s situation to Terra’s (LUNA) collapse. Others fear regulators could target SOL if volatility escalates.
Influencers hyping $1,000 price targets face backlash as Solana-based memecoins like LIBRA crash. Meanwhile, the network’s association with FTX, despite no direct ties, adds lingering stigma.
To Hold, Short, or Sell? The Million-Dollar Question
With conflicting signals, SOL’s path remains murky. Long-term bulls highlight Solana’s speed and institutional backing, while bears cite dilution risks and technical breakdowns. Traders eyeing shorts may capitalise on panic but face volatility from potential ETF news or upgrade timelines.
History offers little guidance. While past unlocks saw muted impacts, current macroeconomic headwinds and crypto-specific fears intensify uncertainty. As $2 billion in tokens hit markets, Solana’s resilience, or lack thereof, could redefine its 2025 trajectory.
The clock ticks for SOL holders. In a market where narratives shift hourly, adaptability may trump conviction.
