The post Could Solana Repeat Bitcoin’s 2021 Crash? appeared on BitcoinEthereumNews.com.

Data researcher Ben Lilly says the crypto market may face significant turbulence this year, particularly for Solana (SOL). He predicts a “Grayscale Effect” that could put pressure on SOL prices. The term refers to the potential impact of scheduled share unlocks from the Grayscale Solana Trust, which is set to occur twice in 2025 — between January 24 and February 2 and July 24 to August 7. Implications of the Grayscale Effect on Solana The “Grayscale Effect” draws from past experiences with the Grayscale Bitcoin Trust (GBTC). When Grayscale unlocks its shares, investors typically sell them to capitalize on the premium — the difference between the net asset value (NAV) of the underlying asset (Bitcoin or Solana) and the share price. Historically, this has led to increased selling pressure, sharp price declines, and, in some cases, market-wide turbulence. Lilly pointed out that a similar scenario unfolded in 2021 with GBTC. When the premium disappeared, Bitcoin’s market peaked before a severe correction ensued, contributing to the collapse of firms like 3AC, Celsius, and Voyager. Lilly argues that the Grayscale Solana Trust (GSOL) could replicate this pattern. When SOL unlocks occur, investors may offload their shares en masse, squeezing the premium and driving prices lower. For instance, an earlier unlock between July 26 and July 31, 2024, reportedly resulted in a 40% drop in SOL prices within ten days. “This cycle, it appears Grayscale is running the same trade with its Solana version,” Lilly observed. According to the data researcher, the upcoming unlock in January 2025 may produce a similar effect. Investors who purchased SOL shares at a premium will likely sell once their lock-up period ends, creating downward pressure on prices. Lilly warns that January 27, 2025, could mark the “beginning of the end” for GSOL premiums, with subsequent market corrections…

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Filed under: News - @ January 3, 2025 4:21 pm