The value of the decentralized finance (DeFi) token Solana (SOL) continues to slump amid concerns over the network’s close association with the now-collapsed FTX cryptocurrency exchange. Notably, the price drop has accelerated after the arrest of FTX founder Sam Bankman-Fried.
At the moment, Solana is valued at $9.39, a drop of almost 7% in the last 24 hours, while on the weekly chart, the token has plunged by almost 20%. The latest drop follows a sustained trend of decline that saw the asset lose the $10 support position.
Furthermore, Solana has been recording sustained selling pressure, with the market capitalization dropping by almost $890 million in a week to stand at $4.35 billion by press time.
Impact of Solana-FTX association
Although Solana has battled the prevailing general market sell-off, the asset hopes of emerging as an ‘Ethereum (ETH) killer’ appear dented as the fallout from FTX continues. Notably, the general confidence in Solana’s future has faltered following the FTX incident.
In this case, investors are still determining if the close association between the two parties will jeopardize the future of Solana. Notably, at the height of operation, Bankman-Fried and FTX offered significant support to the Solana team.
However, Solana co-founder Raj Gokal has maintained the ecosystem is not concerned with the price movement of SOL, noting that the future looks promising.
“I think in the long term, it’s really good. We’ve always heard really negative criticism about FTX’s involvement in the ecosystem and that concentration of ownership stake,” Gokal said.
At the same time, the network is recording an exodus of projects and developers. For instance, DeGods and Y00ts, two of the top non-fungible token (NFTs) projects on the Solana blockchain, have announced migration to the Polygon (MATIC) ecosystem.
Interestingly, statistics from data aggregator Token Terminal claimed Solana developers have dropped by almost 90% in 2022. However, Solana has disputed the figures.
Overall, the FTX concerns are likely to complicate matters for Solana, considering the network has been facing criticism over sustained outages.
Solana technical analysis
Elsewhere, from technical analysis, Solana’s daily gauges on TradingView are primarily bearish, with a summary aligning with the ‘sell’ sentiment at 15, while moving averages are for a ‘strong sell’ at 14. Elsewhere, the oscillators are recommending neutrality at 9.
In the meantime, the machine learning-based algorithms at PricePredictions projects that Solana is likely to trade at $11.76 on January 1, 2023.
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