Solana crypto token loses most of its value in 2022 as FTX collapse weighs down industry
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The total market capitalisation of the cryptocurrency market now stands at US$798.4 billion (S$1.08 trillion).
PHOTO: REUTERS
NEW YORK – The price of Solana, a cryptocurrency token that had been lauded by FTX founder Sam Bankman-Fried, fell 10.36 per cent on Wednesday, bringing its slump to 94.2 per cent so far in 2022.
The collapse of FTX has rippled across the industry, hobbling liquidity at companies with exposure to what was once one of the world’s biggest cryptocurrency exchanges.
Solana is the token behind the upstart Solana blockchain, which supports smart contracts including non-fungible tokens, and has emerged as a rival to the Ethereum blockchain.
Bankman-Fried, who is expected to enter a plea next week to criminal charges that he defrauded investors and looted billions of dollars in customer funds at FTX, frequently praised Solana.
FTX and Alameda Research, Bankman-Fried’s trading firm, held Solana tokens on their balance sheets. While Solana has no direct relation to FTX and limited exposure to the failed exchange, its association with Bankman-Fried has been a drag.
“The general problem with crypto is that its lack of intrinsic value means that values are based on confidence and perceived utility. If those suffer in relation to a specific token, then it suffers,” said Mr Steve Sosnick, chief strategist at Interactive Brokers.
A representative for Solana was not immediately available for comment.
The token has dropped 51.14 per cent since the furore around FTX began unfolding on Nov 2. In the same period, Ether has fallen about 21.3 per cent and Bitcoin has declined 17.6 per cent.
The price of Serum, the token for the decentralised exchange of the same name created by Bankman-Fried on the Solana blockchain, has been down 80.5 per cent since Nov 2, trading at just over 14 US cents, according to CoinMarketCap.com.
The total market capitalisation of the cryptocurrency market now stands at US$798.4 billion (S$1.08 trillion), according to the website, about a third of its peak of over US$3 trillion in November 2021.
REUTERS, BLOOMBERG