A recent price rally in the Solana (SOL) market ran out of steam midway as traders’ attention shifted to crypto-focused hedge fund Alameda Research’s insolvency rumors.
Alameda Research insolvency rumors affect SOL
On Nov. 7, SOL’s price plunged nearly 6% to about $30.50. The intraday selloff came as a part of a broader pullback trend that started on Nov. 5 when SOL peaked at around $38.75. Between then and now, the Solana token is down over 20%.
SOL/USD daily price chart. Source: TradingViewThe beginning of SOL’s plunge coincided with reports that Alameda Research has liabilities worth $8 billion but may not have liquid assets on its balance sheet to meet those obligations.
Interestingly, the value of all those assets plunged synchronously in the past 48 hours — including SOL, as well as FTX Token (FTT), Serum (SRM) and Oxygen (OXY) — on fears of cascading liquidation if Alameda Research becomes insolvent.
Google partnership, NFT growth
Nevertheless, traders showed interest in holding SOL’s price above $30, a technical support level, on Nov. 7. One reason could be a flurry of optimistic news that emerged over the weekend, including the launch of smartphones, DApp stores, and a Google Cloud partnership.
In addition, Solana continues gaining higher traction in the nonfungible token (NFT) sector. For instance, the total number of NFTs released on the Solana blockchain is up 19.3% quarter-over-quarter to reach over 8 million in Q3 2022.
“Several developments across Solana’s NFT sector allowed it to maintain a strong position relative to a peer group of the top L1s by secondary NFT sales volume,” noted James Trautman, researcher at data resource Messari, adding:
“Secondary sales volume managed to eclipse Ethereum in early September. The majority of the activity during that period took place on Magic Eden V2.”
Solana NFT secondary sales volume dominance. Source: Messari/CryptoSlamOn Nov. 2, Instagram added support for Solana-based NFTs, enabling users to create, sell and market their favorite digital arts and collectibles.
50% SOL price rebound?
As mentioned above, the SOL price’s correction showed signs of exhaustion when it retested $30 as its support level on Nov. 7.
SOL/USD daily price chart. Source: TradingViewSince August 2022, two rebound moves from this support line saw SOL recovering to nearly $37, excluding one time when the price slipped toward $27.75 in October. The same price ceiling, coupled with a multi-month descending trendline resistance, was instrumental in capping the Solana token’s price rally in the week ending Nov. 6.
Related: Solana’s co-founder addresses the blockchain’s reliability at Breakpoint
A break above the $37 resistance line could have SOL test the $44.25-47 range thereafter, or a 50% price rally when measured from current price levels, by December 2022
Conversely, an extended selloff below the $27.75-$30 support area risks sending SOL’s price to around $19.50, or about 40% lower than today’s price.
SOL/USD weekly price chart. Source: TradingViewThe $19.50 level served as support between March and July 2021, as shown in the chart above.
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