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On Thursday, as the broader cryptocurrency market showed signs of recovery, Solana (SOL), one of the leading companies, announced… Alternative currenciescrossed the $200 mark, reflecting an 8% increase over the past 24 hours.
This bullish momentum brings the sixth-largest cryptocurrency by market capitalization closer to its all-time high achieved in November 2024. However, market experts warn that Solana could face significant pressure in the coming days.
A double-edged sword for Solana investors
Ben Lilly, market analyst at Jarvis Labs, recently highlighted the potential risks associated with the “grayscale effect.” In a Social media sharingHe warned that the upcoming Grayscale SOL token open could create significant selling pressure on the altcoin.
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Grayscale, a prominent digital asset management company, has an asset protection policy in place for 12 months after an acquisition. As two major liberalization periods approach – from January 24 to February 2 and from July 24 to August 7 – Lilly warns that investors should stay alert.
The mechanics of the Grayscale Trust are similar to those seen in the past with the Grayscale Bitcoin Trust (GBTC). In this case, investors will buy Bitcoin (BTC) through Grayscale, which will hold the assets for a period before issuing shares.
This created a premium, as shares traded at a higher price than the actual price of Bitcoin, leading to significant market spikes.
However, when that premium disappeared, it marked the peak of the market in 2021, leading to a series of failures for companies like Three Arrows Capital, BlockFi, Celsius, and Voyager.
Possible price decline ahead for the SOL price
Lilly notes that Grayscale is now implementing a similar strategy with Solana, and upcoming openings may mirror the past Volatility Seen in crypto market.
The analyst notes that previous large purchases of SOL tokens saw private placements open from late July 2024, during which the price fell by 40% in just ten days.
The concern is that the same trend may emerge with January 2025 opens, which could lead to a major sell-off. The analysis suggests that when investors who have benefited from the premium in the past go to sell their holdings, they may flood the market, creating downward pressure on the stock. Sol price.
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Lilly recommends that Solana holders consider selling before the January 24 open date, as that could represent a critical turning point for the asset.
While Grayscale Trust for Solana is relatively small compared to SOL’s overall market cap, the potential impact on price cannot be overlooked.
According to Lilly’s analysis, historical trends suggest that even small openings can have a significant impact Market behavior. He stresses that although the coming selling pressure may not lead to catastrophic losses, it could lead to local peaks and declines in premiums.
As of this writing, SOL is at $205, down just over 20% from its peak of $263 reached on November 24 of last year.
Featured image of DALL-E, chart from TradingView.com
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