Solana’s native token SOL erased most of Thursday’s 15% fall after Ethereum founder Vitalik Buterin tweeted support for the blockchain most battered by FTX’s implosion.
“Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future,” Buterin tweeted shortly before SOL’s Thursday recovery began.
SOL has lost 20% in just one week. It is trading in the single digits for the first time since February 2021.
“Hard for me to tell from outside, but I hope the community gets its fair chance to thrive,” he said of Solana’s developers, who are building a decentralized finance (DeFi) ecosystem to rival Ethereum – the DeFi market leader.
Some on Crypto Twitter are pointing out that SOL’s 2021-2022 chart mimics the boom-bust pattern set by ETH in 2018 and 2019, when ETH fell 95% from its heights above $1,200. ETH weathered another boom-bust cycle and has settled in the $1,200 range again.
For SOL to recover it will likely have to shake off its association with Bankman-Fried, who invested heavily in SOL and supported Solana projects with FTX venture deals and market-making from Alameda Research. The twin companies’ implosions triggered an exodus of capital from Solana DeFi; and its trading protocols continue to suffer from insufficient liquidity.
Bankman-Fried’s impact on SOL is more than just bad PR, however. His companies bought over 58 million SOL tokens in aggregate – 15% of the current circulating supply. Though it's unclear how much SOL the now-bankrupt companies still control, the liquidation of those assets could further depress SOL’s market.
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