Solana faced a significant setback, dropping 5% in a single day amid growing concerns surrounding FTX's sell-off plans. The sudden decline has put approximately $125 million worth of short positions at risk, prompting investors to closely monitor the cryptocurrency's recovery.

The price drop coincided with a notable 40% decrease in open interest (OI) of Solana's SOL over the past 30 days, plummeting to $1.78 billion by May 9, according to CoinGlass data. This decline in OI typically indicates traders' uncertainty and reluctance to take positions on the asset's price.

Despite the sharp decline, Solana has demonstrated a remarkable ability to bounce back swiftly from such dips, raising the possibility of a rapid recovery that could liquidate the substantial short positions.

Historical data reveals instances where Solana's price has dipped by 5% before quickly rebounding within 24 hours. For example, on April 19, Solana experienced a similar 5% decrease before swiftly recovering to $157 within hours, just ahead of the Bitcoin halving on April 20.

Should Solana's price rise by 5% to reclaim its May 7 price of $157, it would trigger the liquidation of $125 million in short positions.

Analysts attribute Solana's recent decline to FTX's announcement on the same day, revealing plans to repay victims of the exchange's collapse through asset sell-offs, a significant portion of which includes Solana.

Additionally, a broader decline in cryptocurrency market sentiment has been observed, as reflected in the Fear and Greed Index score, which dropped by 13 points over the past 24 hours, reaching a score of 54 on May 9.

However, recent developments in the ongoing competition between Solana and Ethereum may have also influenced Solana's price in the short term. Reports surfaced on May 8 suggesting that the Solana network could potentially surpass Ethereum in transaction fees, presenting a positive news indicator that could drive a price spike.

Furthermore, as of May 7, Solana's total economic value reached $2.8 million, closely trailing Ethereum's $3.1 million total economic value, indicating a tightening competition between the two networks.