Solana - Still A Potential Investment Opportunity?

in LeoFinance2 months ago


Tied To A Sinking Ship

When the ship goes down, it takes everything down with it that is in some way connected to it. This is the story of Solana and the Titanic, Known as FTX. What an incredibly sad moment for Crypto. Sad, yet extremely positive at the same time. Rooting out bad actors and deceptive players is an extremely bullish event for Crypto’s future and growth. It’s actually a win for Crypto, although I am sure many will be unable to see it at this stage. One of the hardest hit by this implosion has been Solana. FTX was an early investor of Solana, and as a result, held a significant amount of SOL. FTX purchased almost 11% of Solana’s supply. This is a classic case of “when partnerships turn sour”. Does this mean that Solana is over? Will Solana ever recover? These are the questions that everyone is trying to find answers to.

Unfortunately, these questions will only be answered in time, as this ordeal plays out. There is no assured and definitive answer at this stage of the game. However, there are a few positives. Solana is not FTX, although a strong connection has existed, that connection is busy being completely severed, which is a good thing. I know there have been a number of cases of assets wrapped on Solana losing their peg, as well as heavy selling pressure, as investors run for the door. This is an expected response and is not really indicative of Solana’s future. That being said, you cannot deny that Solana has a difficult journey ahead, if it is to survive, and eventually go on to recover.

Solana DeFi has also seen a complete exodus. According to DeFiLlama, the TVL is a mere $291 million, after being as high as $10 billion back in 2021. Considering that TVL is quite an efficient metric when it comes to utility and on-chain use, it is actually rather strange that Solana is still above the $10 mark.

Image Source – Defillama.com

In some ways, it does display a relative amount of strength, which is at least one good sign, even if barely so. Investors are likely to begin monitoring for fresh signs of life, especially via the TVL data. It is still too early to discern if Solana is completely over, or if there is still a glimmer of hope.

The Crypto market is a strange place, where often, the unthinkable takes place. I always keep this in the back of my mind when considering future endeavors and investments. Solana has however turned into a bit of an “all or nothing” opportunity. The risks are real and anyone considering investing in Solana now should consider it as somewhat of a gamble, at least until there is further indication of a potential future positive outcome. However, it is also important to note that Solana is currently taking hits as a result of “association”. In other words, Solana didn’t fail (apart from previous outages) in any way, it’s merely the destructive implications of being heavily associated with FTX.

My Response To Solana

Before I continue, please note that this is not financial advice. I have chosen to take a “risky bet” on Solana, and don’t encourage anyone to do likewise. Rather conduct your own research and take responsibility for your own decisions. That being said, I am currently short on Solana. I still envision further downside for the entire Crypto market, and therefore consider that SOL will drop a lot heavier than most. Secondly, I have orders set at extremely low levels, in case SOL experiences a complete capitulation and wash-out event. These orders are set between $1 and $2. Furthermore, I am slowly picking up small amounts of SOL when the price is in a “sweet spot”.

I am also looking to accumulate a bit of SOL at the $5 to $7 level. I think we will still see these levels in the coming weeks. However, for now, I am short. What you also need to understand is the strategic thinking and planning behind this “move”. Firstly, the SOL being accumulated now is being done via passive income (no financial risk) mechanisms that I have been building over the years. Secondly, I am short SOL, which means that I am generating profits as SOL falls. This can be used to finance buys anywhere between $1 and $7. Obviously, if the market shows strong signs of not heading lower, I will enter at higher levels.

Essentially, I am making a risky move, but reducing my risk to almost zero by utilizing strategic accumulation. When you plan your moves as opposed to simply buying, and at any level, you are able to reduce and manage risk effectively. This is something that I have mentioned a lot in recent months. Risk management is the apex of successful trading and investing. One of the most horrific revelations to come out of this FTX debacle is that there appears to be no risk management whatsoever. When you are experienced in playing both sides of the market (long and short) you are able to hedge your long positions by opening equal, or marginal shorts, and vice versa.

If anything has come out of this all, it is the evidence that SBF was not the “trading genius” everyone believed him to be. This story is made up of rookie mistakes that should never be present in the trades of an experienced trader, never mind the CEO of a trading enterprise.

Disclaimer

First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.

This article was first published on Sapphire Crypto.

Comprehensive list of referral links for platforms & opportunities I utilize to generate daily Crypto income.

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Nice analysis of the situation at hand.
Small risks or limited risk with potential huge returns is what makes very successful gambles.
It also helps you ride the market makers manipulation of the market.
They are doing what they always do and we should be looking for spots to get more skin in the game.

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You're right that this game we play is all about weighing up the risk:reward.

Trying to target the maximum reward, for the minimal amount of risk.

But for me?

Well, I just don't think playing Solana from the long side - even all the way down here - puts the odds on my side.

The better jackpot play might be if Solana dies (not completely out of the question at this stage) and you can ride it all the way into the ground while holding a short.

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I am not playing either side. My trade design sees minimal exposure at current levels. Simultaneously, I am short, in a calculated relativity exposure level that outweighs potential loss of current exposure, which is in essence "long".

I can therefore ride that short as long as I choose. As mentioned, there are not sufficient indicators at this stage.

If there appears to be no hope, I ride the short down. If things improve. I close or reduce short exposure and go long.

Win/win (I can also add to my short if things get really bad)

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I do think SOL will unravel as the blockchain has too much downtime. Maybe at 20c it is a gamble worth taking, but personally the risk is too high at even $2.

Very interesting this analysis and what you wrote about Solana. This blockchain caught my attention almost a year ago. then I noticed that it had several problems regarding financial transactions, while lately it seems that these problems have been resolved the value of the token has drastically collapsed. reading your post I understood even better what was the cause of the collapse of the value of this cryptocurrency. I noticed that your prediction sees this token really at very low values ​​that I never even expected to think a few months ago… While but now your analysis seems very credible to me.

It might not even go near those levels... but I always prepare for multiple outcomes. As I said, I will move in earlier if I get signals from the market...

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