Why is SOL dropping?

With the FTX unlocking of 11.2 million SOL, or equal to $1.77 billion, coming up on March 1, many investors have grown weary that the event could influence the liquidity and price stability of Solana. The influx in token supply could lead to pressure on Solana’s price, potentially triggering a significant drop.

However, investors could take advantage of the opportunity presented by the price drop to accumulate more Solana. If demand holds up, Solana’s price may see a rebound soon.

According to Amberdata, last week, SOL block trades on derivative cryptocurrency exchange Deribit accounted for nearly 25% of all Solana options activity, or $32.39 million out of the total $130.74 million. This marks the second largest portion of SOL block trades ever recorded, with nearly 80% of block trades concentrated in put contracts.

During a price drop, whale investors would often opt for put option transactions that are executed over-the-counter instead of through regular buy orders on the exchange. Put options are derivative contracts that provide investors the right to buy or sell the asset, instead of an obligation. This grants buyers more minimal impact, protecting them from potential market volatility.
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