Solana Crypto: Stablecoin Moves Spark ‘Extreme’ Volatility Risk

Solana’s crypto stablecoin market activity has surged dramatically, raising concerns about increased price volatility for its native token, SOL.

The network experienced sharp fluctuations in Tether (USDT) trading, with a 137% spike in late February following a previous 61% decline.

Analysts warn that this instability, combined with external factors like FTX-related token unlocks, could drive unpredictable price movements for Solana.

Solana Crypto Price May See Sharp Swings

Tether (USDT) trading on Solana crypto witnessed extreme fluctuations in February, indicating shifts in investor positioning.

According to Mercuryo data, USDT trading volumes increased by 137% throughout the last week of February after experiencing a 61% decline in the previous week.

The rapid rise in trading activity indicates traders are moving their assets as the volatile nature of the market may increase.

According to Mercuryo’s CEO Petr Kozyakov, the observed trading patterns reveal how Solana’s platform may experience higher levels of market volatility.

Kozyakov assessed that Solana enjoys efficient processing and large-scale capabilities, yet, its unpredictable market patterns suggest upcoming difficulties.

The active use of decentralized exchanges Jupiter and Raydium increases trading dynamics by drawing substantial investor interest to Solana.

Solana’s crypto price seems likely to experience significant price fluctuations because of this increased trading activity which causes traders to restructure their approaches.

Market sentiment and liquidity undergo dramatic effects when these price movements occur.

Stablecoin activity reduces market volatility and creates opportunities for SOL price changes during the following weeks.

SOL Approaches Key Price Breakout Point

According to its technical market signals, a significant phase for the Solana token price is imminent.

Analysts using Solana Heikin Ashi hourly charts identify upcoming price movement potential through converging triangles.

Analysts repeatedly point out that market conditions determine whether the price will move upwards or downwards.

Crypto analyst Trader Tardigrade characterized the pattern because it directs future market movements.

Market interest stays focused on any possible breakout since it may trigger either bullish price action or bearish movements.

SOL’s fluctuations in an already volatile market is compelling traders to adopt a cautious approach.

Changes in liquidity and broader economic trends outside of the platform may impact Solana’s cryptocurrency price movement.

Increasing buying pressure may cause SOL to attempt to break through resistance levels.

The price decreases when large investors engage in selling activity combined with negative market factors.

FTX Bankruptcy Adds Selling Pressure to Solana

The Solana crypto market suffers from ongoing FTX bankruptcyproceedings. On March 4, FTX and Alameda Research released the largest amount of SOL tokens since November 2023, when they unstaked $431 Million tokens.

The substantial token release created market turbulence, producing higher selling pressure on SOL units.

The FTX restructuring plan allows weekly token liquidations from $50 Million until they reach $100 Million per week.

Under specific circumstances, the bankrupt exchange can petition the court to increase its weekly liquidation limit beyond $100 Million to a maximum of $200 Million.

Despite controlling price volatility, these scheduled sales might still produce movement in SOL market conditions.

FTX will distribute $14.5 Billion to $16.3 Billion in payments to creditors during the second reward distribution on May 30.

Market analysts predict creditors will dispose of some of their SOL tokens during repayment periods, thus creating further price drops.

The structured release of SOL exchange funds prevents general market crashes, but it functions as a barrier to SOL price growth.