Wintermute Withdraws $38M in Solana Ahead of $2B Token Unlock, Raising Concerns Over Market Impact

Wintermute withdrew over $38 million worth of Solana (SOL) from Binance on Feb. 24, just days before the largest token unlock in Solana’s history, scheduled for March 1. This $2 billion unlock will release 11.2 million SOL tokens into circulation, adding pressure to the already struggling market.

The withdrawal occurred as Solana’s price fell by more than 7.5%, reaching a three-month low of $155. Concerns over the token unlock have arisen because many of the tokens that will be released were purchased at a significantly lower price through FTX auctions. Large firms, including Galaxy Digital, Pantera Capital, and Figure, bought SOL at around $64 per token. As these tokens unlock, analysts worry that these companies could sell their holdings, driving the price of SOL even lower.

The upcoming unlock is expected to add over 15 million SOL, or roughly $2.5 billion, into circulation over the next three months. In addition to these unlocked tokens, inflation will create another $1 billion worth of SOL. This has led to fears that the market could face significant selling pressure, particularly since many of these tokens were acquired at discounted prices, leaving firms with little incentive to hold on to them.

Crypto analyst Artchick.eth noted that the firms involved in purchasing the tokens at FTX auctions stand to make significant profits, with Galaxy Digital, Pantera, and Figure potentially earning $3 billion, $1 billion, and $150 million, respectively. Combined with inflationary pressures, the influx of unlocked tokens could further lower SOL’s price.

Adding to the uncertainty is the recent Libra meme coin scandal, in which a rug pull siphoned off $107 million, leading to a 94% collapse in its price. This scandal has already dampened market sentiment, further exacerbating concerns about Solana’s future price movements.

With so much SOL entering circulation, it’s unclear how the market will react. While some industry players are still hopeful, others, like crypto trader RunnerXBT, have warned that it is a dangerous time to buy Solana. The large unrealized profits held by institutional investors will likely lead to significant sell-offs, contributing to the bearish sentiment already affecting the market.

As March 1 draws closer, the crypto community is closely watching Solana’s token unlock and its potential impact on the price and overall market stability. The situation remains uncertain, with many fearing that the unlock could trigger further volatility for SOL.