Ethereum’s Biggest Rival Slides as Exchanges Halt Deposits of Solana-Based Stablecoins

Everything is dropping in the wake of FTX’s bankruptcy but Solana’s plunge has been extreme.

The crypto market is suffering deep losses following the dramatic collapse of the FTX exchange. Solana (SOL), a so-called Ethereum killer, having been languishing since the beginning of the year, finds itself in more trouble.

On Nov. 17, the Binance platform announced the halting of deposits of stablecoins USDC and USDT via the Solana blockchain “until further notice.”

Solana is Getting Hammered

Deposits of USDC and USDT tokens on other blockchains stay operative. In the latest update, the top exchange has reactivated deposits of USDT on Solana.

Other exchanges including OKX and ByBit also reported the suspension of these Solana-based stablecoins on the same day.

OKX said in the initial announcement that it would delist the tokens but the exchange shifted its statement, saying it paused deposits of the tokens.

The three major exchanges have yet given any further details about the decision. The halting came amid a distressing period in the market, particularly speculations about the connection between Solana network and FTX as well as Alameda Research have since circulated.

The CEO of Circle is most concerned about the potentially risky game that cryptocurrency exchanges may be tempted to play as the cryptocurrency industry enters a period in which forces are being redistributed.

Deep Water

Apart from FTX’s native token FTT, Solana (SOL) is the most affected cryptocurrency following the collapse of the FTX exchange. The SOL token reportedly lost over 50% of its value since the exposure of FTX earlier this month.

It resulted from the fact that FTX and its venture company, Alameda Research, initiated a huge sale of SOL in order to obtain funds and ensure that the firm would continue to operate normally.

However, a review of Solana’s performance from January through November reveals that the formerly dominant cryptocurrency had been experiencing difficulties previous to the event in question.

There was a time when some referred to Solana as the “Ethereum killer” due to its reduced transaction costs, higher processing speed, and potential for scalability.

On the other hand, the present circumstance is introducing an element of uncertainty into the blockchain platform.

Since reaching its all-time high of $260 in November 2021, the price of the blockchain’s token, which is denoted by SOL, has fallen by around 70%.

At the time of this writing, the price of SOL on the market is around $14. In addition to the falling price, the TVL of the ecosystem experienced a significant reduction as well. The coin is still having trouble getting back to the good old days when it was used.

Ethereum Shines?

Since The Merge, the Ethereum blockchain has undergone a drastic change in its tokenomics. The major shift from mining to staking has since not been fully supported by part of the community. Yet, the second-largest cryptocurrency seems not to lose momentum, despite the recent crash.

Following an extended downtrend, Ethereum (ETH) failed to defend the $1,300 mark. Since September 18, the price of ETH has been nearly constant between $1,280 and $1,440, with no signals of a breakout.

At the moment, the price of ETH is on the verge of breaking free from the confined zone. Experts believe that the price of ETH will retest the low of $1,200 before quickly rebounding to $1,280.

If the aforesaid scenario occurs, experts predict that ETH will continue to recover and may retest the $1,440 level.

Furthermore, since the successful transfer to the Proof-of-Stake (PoS) on September 15, performance on the Ethereum network has reached an all-time high.

According to Glassnode statistics, Ethereum has a participation rate of more than 99% on average. A high participation rate is directly linked to validator node uptime, fewer missed blocks, and efficient block space utilization.