Strong price performance of Solana on market is last thing you would expect after FTX implosion
Solid price performance from Solana was not the most expected thing by most cryptocurrency market participants. Given the heavy pressure on the asset after the FTX explosion and the large amount of coins in free circulation, we really shouldn’t be seeing the price movement we are seeing now. Although there are some reasons behind this.
Users are sleeping on SOL
All of the aforementioned factors did not go un noticed as the majority of traders and investors were passing over Solana, not considering it as a potential investment, according to funding rates and trading volumes we saw previously.
However, lack of social recognition and low funding rates are usually indicators of continuation, as no selling pressure is provided by medium or long-term Solana holders. The situation will change as the social indicators around SOL will move upwards indicating the return of potential sellers to the market.
Funding rates at “usual” levels
Low funding rates are a sign of low liquidity and, quite often, descending volatility on the market. On the other side, abnormally high funding rates increase the potential of an upcoming volatility spike in either direction. In the case of Solana, rates are at a moderate level, enough to bring volatility back to the market, without causing too much shakiness that would cause a rapid price reversal.
Unfortunately, both SOL’s funding rates and social recognition are temporary indicators that will rise to extreme values if the market continues to rally. But at the same time, none of the above indicators provide us with any insight into Solana’s long-term prospect on the market. There are millions of coins still in circulation that could hit the market any day.
