Solayer price has crashed this week, erasing millions of dollars in value. After soaring to a record high of $3.4 this month, the LAYER token nosedived to a low of $1.5892. This drop brought its market cap to $354 million, down from the year-to-date high of $627 million. So, is it safe to buy the Solayer dip?
Why Solayer Price Crashed
Solayer is a blockchain company that offers restaking solutions on the Solana ecosystem. To some extent, its solution resembles that of EigenLayer, which provides these solutions on the Ethereum network.
Solayer also offers a Visa card that lets users deposit and spend their USDC tokens globally. Holders can also earn up to 4% by investing in the sUSD T-Bill.
Solayer has accumulated over $116 million in assets, much lower than the year-to-date high of over $520 million. This occurred despite increased staking inflows on Solana this year.
The main Solayer news of the week is that its LAYER token plummeted by more than 40%, erasing almost $300 million in value. It was unclear why the token crashed, although analysts cited an upcoming unlock.
READ MORE: Solana Price Prediction: How High Will SOL Go with $6B in ETF Inflows?
Solayer will unlock 43.40 million tokens worth $78 million on May 16, with these coins going to airdrop recipients, the foundation, and the community. The network will also unlock tokens worth over $90 million later this year and $386 million next year.
Solayer has 210 million tokens in circulation against a total supply of 1 billion, and its vesting schedule will end in 2029. Unlocks typically lead to user dilution by increasing supply, especially when demand is low.
However, it is highly unlikely that the token unlock alone is the reason why the LAYER price crashed, since there have been other unlocks recently. The crash likely resulted from Solayer insiders selling tokens as the coin had risen almost 500% since March to its highest level this year.
Learn From the Mantra Crash Before Buying the Layer Dip
This week’s Solayer crash resembles the recent Mantra plunge. Last month, Mantra dropped by more than 90% within a 24-hour period, a move that the team blamed on forced liquidations. Some analysts disagreed and pointed their fingers at insider sales.
Like Mantra, Solayer’s crash has made it significantly cheaper, moving from almost $3.4 to below $3. This decline may make it more attractive to investors seeking to buy the dip, just as those who wanted to accumulate Mantra as it fell from $9 to below zero.
The risk, however, is that the Solayer price may perform like Mantra did and continue falling. Also, there is always a risk for timing the market.
The likely scenario is where the LAYER price forms a bearish flag or pennant here and then continues falling now that real believers have lost faith in it. This means that it may drop below $1 in the coming weeks.
READ MORE: XLM Price Prediction: 3 Reasons XRP ‘Little Cousin’ is Set to Surge
