Solana (SOL) is bracing for increased volatility as investors reposition stablecoin holdings on the network, while upcoming FTX repayments add further uncertainty to its price action. Analysts highlight significant shifts in stablecoin trading and the emergence of a key technical pattern that could determine SOL’s next move.
Stablecoin Trading Surges on Solana
Solana’s network has witnessed extreme fluctuations in stablecoin trading, particularly with Tether’s USDT. According to a report from global payments infrastructure platform Mercuryo, USDT trading on Solana’s transport layer surged by over 137% in the final week of February, following a 61% plunge the previous week.
Petr Kozyakov, co-founder and CEO of Mercuryo, noted that this surge signals “frenetic activity,” which may indicate further volatility for SOL. He explained:
“Solana’s inherent strengths – fast transaction processing, high scalability, and an active trading ecosystem – may also be factors. This is against a backdrop of an ecosystem attracting, at times, high trading volumes.”
The increased trading activity is particularly evident on decentralised exchanges (DEXs) such as Jupiter and Raydium, which have seen a spike in interest. This suggests that traders are shifting positions in search of new investment opportunities, potentially impacting SOL’s price stability.
Technical Chart Pattern Could Be Key
Beyond stablecoin fluctuations, a crucial technical pattern has emerged, potentially determining SOL’s near-term price movement. Crypto analyst Trader Tardigrade identified a converging triangle formation on Solana’s Heikin Ashi hourly chart, stating that both bullish and bearish outcomes remain possible.
A converging triangle is a technical indicator suggesting price consolidation before a breakout in either direction. If SOL breaks upward, it could gain momentum, but a downward move may result in further losses.
Memecoin Frenzy and FTX Repayments Impacting SOL Price
Solana’s price action is also being affected by external factors such as the ongoing memecoin craze and the upcoming FTX repayments. Some analysts suggest that the recent rise of memecoins is siphoning liquidity from SOL, diverting investor focus to high-risk, high-reward assets.
However, a more pressing concern is the distribution of SOL tokens linked to the collapsed FTX exchange. Kozyakov warned that FTX’s repayment plan could trigger selling pressure:
“The defunct FTX exchange has set up a repayment plan that involves distributing a large amount of SOL tokens to creditors, which can potentially result in selling pressure.”
FTX’s Massive SOL Unlock and Future Sales
On 4 March, FTX and Alameda Research-linked wallets unstaked approximately $431 million worth of SOL, marking the largest SOL unlock since November 2023. Although this does not necessarily mean an immediate market dump, it raises concerns about potential sell-offs in the coming months.
Despite the significant unlocking of tokens, FTX is restricted by a court-approved liquidation plan. Under the ruling from the Delaware Bankruptcy Court, FTX can sell digital assets in weekly tranches, initially capped at $50 million per week and increasing to $100 million in subsequent weeks. If FTX seeks to sell more, it must request court approval, with a maximum potential limit of $200 million per week.
FTX’s next round of repayments is scheduled for 30 May. Under the exchange’s recovery plan, 98% of creditors are expected to receive at least 118% of their claim value in cash. The estimated total value of the distribution is projected to be between $14.5 billion and $16.3 billion.
Outlook for Solana
While Solana’s core fundamentals remain strong, the combination of volatile stablecoin trading, uncertain technical patterns, and the looming FTX repayments could keep its price action highly unpredictable in the short term. Traders and investors will be closely watching whether SOL can stabilise above key support levels or if further downside risks emerge in the coming weeks.
