- Visa plans to implement USDC settlement via the Solana network.
- FTX exchange may liquidate its significant holdings of Solana tokens.
- Solana’s price fluctuates under $20, with potential to dip below $18.50.
The recent announcement by Visa to implement USDC settlement via the Solana network has demonstrated the robustness of Solana’s
Solana Gets a Boost from Visa Announcement
On the previous Tuesday, Visa unveiled plans to enable USDC transactions on the Solana blockchain, triggering a 4.39% surge in the cryptocurrency’s value to $20.25. In contrast, other leading digital currencies, such as Bitcoin and Ethereum, remained fairly stable. This development is a significant endorsement for Solana, widely regarded within the industry as a potent competitor to Ethereum due to its superior transaction speed and reduced costs.
Furthermore, PayPal USD, the company’s proprietary stablecoin, has been launched publicly, further bolstering the credibility of the cryptocurrency sector.
Bernstein Research’s forecast that the stablecoin sector could expand to an estimated $3 trillion within the forthcoming five years further enhances the attractiveness of Solana in the cryptocurrency market.
Despite its potential, Solana currently needs more certainty due to the unstable position of FTX. The exchange might be forced to liquidate its substantial holdings of Solana tokens to address its financial obligations. Consequently, the cryptocurrency market already exhibits decreased trading activity, rendering it more susceptible to recent developments.
Why Should We Worry About FTX’s Liquidation?
Following its financial setback in November, FTX has indicated via legal documents its intention to reimburse creditors in traditional currency. Galaxy has been tasked with liquidating FTX’s assets to expedite this process, which notably includes a significant portion of Solana tokens.
The liquidation limit is initially set at $50 million for the first week, with a provisional increase to $200 million to alleviate potential negative effects on the market.
In a high-liquidity market, the impact of liquidation would be less significant. However, in the prevailing low-liquidity environment, the repercussions of this sell-off could be magnified. The founder of Solana has voiced apprehensions about this situation, proposing a different approach of directly allocating Solana tokens to FTX’s clientele.
SOL/USD Analysis
Over the last day, Solana’s (SOL) price has fluctuated between a peak of $19.84 and a trough of $19.22, consistently staying under the $20 mark. As of this writing, SOL is trading at $19.49, reflecting a 1.37% drop from its daily high. If SOL breaches the support level of $19.22, it could dip below $18.50, a critical psychological barrier that traders should keep an eye on.
Nonetheless, should SOL successfully breach the resistance level of $19.84, it can rally towards the $20.50 mark.
Visa’s recent announcement and the increasing relevance of stablecoins cast Solana in a positive light. However, the impending FTX liquidation serves as a counterbalance. It’s crucial to note that the market needs to be resilient enough to withstand a major sell-off without significant repercussions. Therefore, investors should proceed cautiously and closely monitor these developments before making any moves.
Disclaimer: The insights, perspectives, and data presented in this price analysis are published in good faith. Readers must conduct their own research due diligence. Any decision made by the reader is solely their responsibility, and Crypto Outlooks shall not be held responsible for any consequential or incidental harm or loss.
