Solana (SOL) is currently navigating a tumultuous phase, as massive amounts of the cryptocurrency are being unstaked and put up for sale. This movement has created a series of liquidity pressures, leading investors to question whether Solana can withstand this challenging environment. Recent data shows a significant chunk of Solana’s supply hitting exchanges, with fears that the ongoing sell-off could push its value lower in the short term.

Unstaking Surge from FTX and Alameda Research

The unraveling began when FTX and its sister company, Alameda Research, started unstaking millions of SOL tokens from their holdings. Over a two-day period, they sold off 83,700 SOL, valued at approximately $10 million. This action resulted in a 20% price dip, which left many investors uneasy about Solana’s short-term prospects.

But the situation has escalated further. A whale, a large investor, recently unstaked 134,902 SOL, worth a staggering $19.26 million. This substantial amount of SOL was subsequently listed for sale via the Jupiter Exchange, further adding to the growing pressure on Solana’s liquidity.

The overall effect has been a noticeable drag on Solana’s price, prompting concerns among traders about the ability of the cryptocurrency to absorb this large sell-off without facing a prolonged downturn.

Mounting Sell Pressure

The continued sell-offs have raised alarm bells as Solana’s price has faced a steady decline. The most recent figures show that FTX and Alameda Research have unstaked a total of 3.03 million SOL, worth around $432.5 million. This massive amount of SOL hitting the market triggered a sharp 13.92% price drop, and the situation only worsened with additional sales, including 24,799 SOL sold to Binance and 58,964 SOL deposited onto exchanges.

With 2.95 million SOL still left in the unstaked pool, further downward pressure on Solana’s price seems inevitable unless significant market demand steps in to absorb the influx of SOL. The upcoming months will likely determine whether Solana can recover or if the cryptocurrency will continue to struggle under the weight of the ongoing sell pressure.

Solana’s Struggle to Recover

Despite these mounting challenges, Solana has shown some signs of resilience. After dipping by 20%, the cryptocurrency recovered to $139.21, then rebounded further to $148, reflecting a 9.44% increase. However, this recovery has not been accompanied by a significant boost in trading volume, which dropped by 21%, now sitting at $6.86 billion. This decline in trading activity signals that buyers are becoming increasingly cautious, and Solana’s bullish momentum remains weak.

Unfortunately, the lack of strong support levels has been a recurring issue for Solana. Since its all-time high (ATH) of $270, the cryptocurrency has struggled to find consistent backing from buyers. The weak levels of support and the impact of unstaking have resulted in SOL’s price becoming highly sensitive to sell-offs and profit-taking.

The significant drop in Solana’s Total Value Locked (TVL) further emphasizes its struggles. The TVL, which measures the total value of assets locked in Solana’s decentralized finance (DeFi) ecosystem, has fallen by 37.92%. From a peak of $14.5 billion in January, TVL has dwindled to just $9.002 billion. This decrease indicates a weakening of confidence in Solana’s DeFi ecosystem, as investors have begun to pull their assets out of the network in droves.

What’s Next for Solana?

Looking ahead, the road seems uncertain for Solana. While some argue that a broader market recovery could provide temporary relief, the cryptocurrency’s long-term outlook remains bleak unless significant buyer sentiment returns. The absence of strong support levels leaves SOL vulnerable to further declines, particularly with so much of its supply poised for liquidation.

With approximately 2.90 million SOL still vulnerable to being sold off, analysts are predicting that the price of Solana could fall below the $130 mark in the coming months. If this happens, Solana may find itself trapped in a downward spiral, struggling to regain the momentum that once drove it to its all-time high.

Conclusion: Can Solana Weather the Storm?

Solana’s journey forward looks increasingly precarious as liquidity pressures continue to build. Investors are left wondering whether the network can absorb the mass sell-offs and reinstate buyer confidence. Despite some positive movements in the short term, the broader trend suggests that Solana could face a challenging period ahead unless it can rally support from new buyers or from a broader market recovery. The coming weeks will be critical in determining the future of SOL as it navigates through this period of intense market volatility.