Solana (SOL) Open Interest Surge Correlates with Weak Funding Rate Amid FTX Crisis

• At the time of writing, the open interest in Solana was $251.8 million, with a negative funding rate.
• Solana development activity data remained strong.
• There is a diminishing negative trend.

After FTX fell apart, Solana’s price action was hit hard. In just 10 days, it fell by more than 60%. The SOL price may have seen modest improvements over the past week, but it is still being held back by the broader market’s malaise. 

The recent decline in Solana’s fortunes started shortly after FTX collapsed. After FTX filed for Chapter 11 bankruptcy protection on November 11, the focus shifted to the Solana Foundation’s exposure to the collapsed exchange, which included around $1 million in cash or cash equivalents on FTX.com as of November 6.

However, an infusion of new gains on November 24 drove the price of SOL up by almost 20% from its multi-month low of about $10. The price of Solana has dropped from roughly $30 to around $14, with recent lows around $20. The price of Solana has dropped from $30 to around $14.50 since early this year.

But although Bitcoin drove most of the price activity in the spot market, Solana made some headway in the futures market.

Open interest and financing rate data provide insight into the direction of the market and the potential for a shift in the price trend. Over the past 24 hours, open interest in Solana has grown by almost 6%, which is in line with the market’s predominantly negative behavior, according to Coinalyze data. At the time of writing, the open interest in SOL was $251.8 million.

Rising open interest and mostly downward trending price activity may indicate more people are opening short positions. When the funding rate is negative, it indicates that short-position traders are in control. Something like this usually occurs during a downward trend.

SOL continued to show some development activity despite the overall unfavorable price structure. During November, the development activity contributor indicator remained above average, while development activity increased.