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Solana (SOL) recently saw the unlocking of a massive amount of tokens from FTX/Alameda, raising doubt about the market performance despite recent price hike.
In particular, FTX/Alameda unlocked 186,326 SOL tokens, or about $21,500,000.
This could cause some investors to think about selling their holdings as the market reacts. The price could now be turning volatile and continuing to head down.
This is one in a series of unlocks that have been ticking along since Solana’s earlier days with FTX.
Given that Bitcoin dissidents FTX and Alameda have owned a large chunk of Solana in their portfolios.
This sizeable release represents 186,326 SOL tokens to Sam Bankman Fried and Alameda.
Most of the time, unlocking tokens signifies a time when the supply is higher than the demand for the tokens.
This naturally ensures downward price pressure. FTX/Alameda institutions may seek to make hay while the sun shines, which may lead to selling pressure as they release tokens.
Solana can quickly become a negative market sentiment. Still, Solana has proven resilient in the market.
The Solana price has risen by 10.25% over the last 24 hours, bringing its price to $131.03.
Yet, this surge may not be a leap forward in a bullish trend in the long run. General market optimism, which has, to an extent, benefited Solana, isn’t worth ignoring the lingering impact of institutional token unlocks.
The Rising Wedge Pattern and Market Predictions
In the 4-hour timeframe, we can see that Solana’s price is more or less following a rising wedge pattern.
Generally, rising wedges suggest that the price will break down. It occurs when the price retraces between two converging trendlines with higher highs and higher lows.
This could initially be considered a bullish formation. However, in most cases, it reverses as buyers get tired and sellers seize control.
Solana’s price is currently at the upper boundary of this wedge, and it would be worth paying close attention to a breakdown below the lower trendline.
This can subject the price to significant downward pressure. It would likely send it to a target close to the $96 price mark.
Analyzing price movements in combination with volume, we can see a price decline simultaneously.
This is because buying interest (volume) is seen weakening (via volume oscillator). Since the trading volume has reduced by 12.45%, Solana’s volume oscillator is in he negative zone.
The decrease shows that traders and investors could be less willing to open new positions as they worry that when institutional holders sell off, the seller may not buy.
With the current drop in volume and rising wedge formation on the chart, the price surge might not be sustainable should institutional selling move to the front seat.
Solana Price Prediction and Market Outlook
The outlook for Solana looks uncertain for the future. The rising price in recent times is a good event, and it may not be enough to counterbalance the upcoming bearish pressures arising from token unlock events.
With each release of FTX/Alameda’s holdings, Solana’s supply is increasing in the market, leading to downward price pressure.
According to the current chart configuration, the price could fall to the $96 area if Solana broke down from the rising wedge pattern.
Moreover, remaining over $120 would be possible for Solana only if it manages to avert breakdown from support levels.
If the price cannot hold above these levels, we might see more declines in a short period of time.
If the price fails to stay above the present support, Solana may discover a new base at greater levels before it reverses.
The released Solana tokens by FTX/Alameda, and the rising wedge formation on the chart indicate that the risk comes with caution.
If these tokens get sold into the market, Solana may see a huge dip if the volume also decreases.
If Solana is able to keep its position, and the market can digest the increasing supply, Solana (SOL) price may keep trading in the same price range. This is from $120 to $124, in the short term.
