On March 1, 11.2 million SOL from FTX's bankruptcy auction will be unlocked, worth 2.06 billion USD, and the number of unlocked tokens accounts for approximately 2.29% of the current circulating supply of SOL.
Such a massive selling pressure combined with a sluggish market has led to a relatively poor performance for SOL's price. Since January this year, after the Trump TRUMP concept coin sparked a market frenzy, SOL hit a historic high of 295 USD, only to decline sharply afterward, with the weekly price down for four years, reaching a low of around 160 USD. Is it Solana's turn to face FUD?
This article will explore the impact of this event from various perspectives, including the background of the unlocking and potential market effects.
Background of FTX Bankruptcy and SOL Unlocking
The bankruptcy of FTX is one of the most iconic events in cryptocurrency history. In 2022, this once-industry giant collapsed due to a broken capital chain and poor management, subsequently entering bankruptcy proceedings. As early investors in the Solana ecosystem, FTX and its affiliated company Alameda Research held a large amount of SOL tokens. FTX held approximately 41 million SOL in total, most of which were locked, with unlocking times distributed between 2025 and 2028. To repay creditors, the FTX bankruptcy management team auctioned off these locked tokens in advance, attracting institutional investors with significantly discounted prices.
The 11.2 million SOL being unlocked this time is part of the previous auction. The main institutions that participated in the purchase include Galaxy Digital, Pantera Capital, and Figure, among others. In 2024, Galaxy acquired 25.52 million SOL at a price of 64 USD each, while Pantera acquired 13.67 million at 95 USD, and Figure acquired 1.8 million at 102 USD. These institutions bought at prices far below the market price at the time, and even if the SOL price drops to around 170 USD, the paper profits remain quite considerable.
Potential Impact of Selling Pressure
11.2 million SOL accounts for 2.29% of Solana's current circulating supply (approximately 488 million SOL), worth over 2 billion USD. For an asset that usually has a daily trading volume between 1 billion to 2 billion USD, this influx of unlocked tokens could undoubtedly stir the market. If these tokens are quickly sold off, a short-term oversupply could depress SOL's price, triggering panic selling among investors and exacerbating the downward trend.
The extent of market impact depends largely on the behavior of holders after unlocking. The buyers of these tokens are mostly experienced institutional investors who purchased at low prices during the auction, and their current paper profits are substantial. If they choose to cash out immediately after unlocking, selling pressure will significantly increase. However, from another perspective, these institutions have held for months or even years during the lock-up period, indicating a certain willingness for long-term investment. Matt Maximo, an investor from VanEck, revealed that some buyers he knows explicitly stated that their goal is to pursue higher returns rather than short-term arbitrage.
Additionally, SOL's recent price performance has also provided some clues about market sentiment. Since FTX's bankruptcy, SOL's price has soared from a low of 22 USD to over 170 USD, an increase of over 700%. Despite a recent market correction, the overall trend still shows strong support.
How likely is market panic?
Whether selling pressure will trigger panic in the market largely depends on investors' psychological expectations and the market environment. Some users have expressed concerns about this unlocking, believing that the 2 billion USD selling pressure could break through trend lines, leading to further price declines. However, others argue that a 2.2% increase in circulating supply is relatively limited, and most SOL has already changed hands multiple times in the market, so the actual impact may be exaggerated.
Crypto KOL SOLBigBrain, who entered around 20 USD, stated that some of the price has already started to be priced in; while some may choose to sell after the unlocking, the narrative and momentum of SOL remain quite strong.
Currently, some funds and KOLs on social platforms are generally optimistic about SOL's price performance this year, with a substantial number of opinions suggesting that SOL could surpass 700 USD this year.
Historically, large-scale unlocking events have not always led to market crashes. For instance, in 2023, when FTX was approved to sell 100 million USD of crypto assets weekly, the market did not experience significant declines and instead gradually absorbed the selling pressure. On January 7, 2021, SOL unlocked 362 million tokens, accounting for 55.7% of the maximum supply, while the price was around 3 USD, reaching a historical high of 259 USD in November 2021.
Generally, the negative effects of unlocking tend to ferment one month before the official unlocking, and after the unlocking is completed, the negative impact may have already been fully realized, potentially even resulting in a rebound at certain times. For example, ONDO experienced a massive unlocking in mid-January this year; after reaching a peak in December 2024, it fell sharply but did not see the so-called panic selling behaviors after the unlocking was completed, instead oscillating within a certain range. This time, although the scale of SOL unlocking is larger, the institutional nature of the participants and the high-profit buffer may reduce the motivation for selling.
Solana's fundamentals remain strong
The fundamentals of the Solana ecosystem itself have also helped mitigate potential risks to some extent. As a high-performance public chain, Solana has attracted a large number of developers and users in recent years due to its low transaction costs and high throughput. Over the past year, Solana has also received immense popularity and acclaim driven by meme waves and AI concept coins, with its on-chain wealth effect drawing many users.
According to solscan data, the current total supply of on-chain USDC has reached 9.6 billion USDC and 2 billion USDT, while the quantity of PYUSD has also risen to around 150 million. The number of independent address holders has reached 3,288,566, and the total active staked SOL has reached 390.2 million. Although the number of active wallets has decreased, it remains at a high level.
The number of newly added accounts also remains at a high level.
Conclusion
Overall, the unlocking of SOL worth over 2 billion USD on March 1 will undoubtedly exert some selling pressure on the market, but the likelihood of triggering widespread panic is relatively low. Rational decision-making by institutional investors, the market's absorption capacity, and the resilience of the Solana ecosystem will all be key factors in cushioning this impact. For investors, monitoring price trends and trading volume changes post-unlocking, while formulating strategies based on their own risk tolerance, will be the best way to respond to this event. In the volatile arena of cryptocurrency, opportunities and challenges coexist, and clearly, the story of SOL has not yet reached its conclusion.
