At 23:24 in the early morning, it directly dropped to $0.0346, down 54.17% in 24 hours. It has now barely rebounded to $0.0384, with half of its market value evaporated! What’s even more heart-wrenching is that this project raised $43 million in Series A funding last year, led by top-tier institutions like YZi Labs and Pantera Capital, which shouldn't be so 'fragile'. Today, let's dissect this and see whether this plunge is a natural disaster or man-made, and why a project backed by institutions can also drop so hard.
First, let me provide some background for newcomers: SAHARA is not an unknown entity. It raised $43 million in Series A funding last August and is considered heavyweight in the AI + crypto space. The leading investor, Pantera Capital, is a veteran giant in the crypto world, having invested in star projects like Solana and Avalanche. YZi Labs is also an active player in the AI sector. With these two big names backing it, the market initially had high expectations, but unexpectedly, just over a year later, we witnessed a 'halving drama'. Interestingly, while everyone was guessing whether institutions were cashing out and running away, the officials finally spoke up: there were no unlocks, no security vulnerabilities, and an investigation is underway.
This needs to be clarified first: the official statement of 'no unlock' is key. SAHARA completed its token issuance (TGE) on June 26 of this year, and the tokens for the team and investors will not unlock until June 2026. Currently, all large holdings are still locked and cannot be sold. This rules out the most terrifying scenario of 'institutions dumping and fleeing'—if institutions of Pantera's caliber were eager to cash out, the drop would not just be 50%. But the question arises: if no one is unlocking and selling, why is it still dropping so badly?
The first core reason: the 'liquidity trap' of small-cap coins. Let's look at the data: SAHARA currently has a circulating supply of only 237 million coins, with a circulating market value of $174 million, while the FDV (fully diluted market value) is as high as $731 million. In simple terms, there are very few coins available for trading in the market right now, but many coins might unlock in the future. This structure of 'small circulating supply and large potential selling pressure' means that even a large sell order can crash the price. Last night, the 24-hour trading volume was $45 million, but the turnover rate surged to 30.5%—equivalent to 30% of the circulating coins being traded within a day, which is not normal trading; it looks more like someone is 'escaping at all costs.'
So who is selling? Based on on-chain data, it is highly likely to be early private investors or large holders. Although institutional coins are still locked, there may have been seed round or strategic round investors before the project issuance, and their unlock periods might be earlier. Additionally, in August, a new wallet withdrew 150 million SAHARA from Binance (then valued at $12.1 million). Such significant address movements could likely indicate that large holders are positioning themselves for cashing out. A common issue with small-cap coins is 'weak absorption capacity.' A few thousand bitcoins being sold may not have a significant impact, but a sell order of tens of millions of dollars of SAHARA can directly crush the buying pressure, triggering a chain reaction of panic selling among retail investors.
The second key perspective: the 'double-edged sword effect' of institutional endorsement. Many people believe that 'investments from top institutions are stable,' but in the crypto circle, institutional endorsement is more like an 'entry ticket,' not a 'capital preservation symbol.' When institutions like Pantera invest, they often acquire at a discounted price (which may be over 50% lower than the current market price), and there are strict lock-up periods and exit mechanisms. They invest based on a 'sector logic'—AI + crypto is a hot area. Whether the project can deliver is actually a later issue. This crash has precisely exposed the fact that institutional leadership can only ensure that the project 'can raise money,' but does not guarantee that it 'can make money.'
Interestingly, the FDV of SAHARA is $731 million, while the current circulating market value is only $174 million, which means the market has already set a high price for future unlocks. But the question is, what products does the project have to show for itself? The official website indicates that it is still in the testnet phase, and the mainnet has not yet been launched, which means that, to put it bluntly, 'the story sounds great, but there are no results.' The crypto market has long passed the 'rising from stories' phase, especially with the panic index still at 28 (extreme fear), and funds are more inclined to 'cash out.' Projects without performance support, no matter how prestigious the institutional endorsement, cannot withstand selling pressure.
The third logic: the 'chain liquidation' in the contract market amplifies the decline. Small-cap coins like SAHARA usually have high leverage in the contract market—many retail investors feel that with institutional endorsement, they can go long with 5x or 10x leverage. Last night's crash was likely triggered by a large spot sell order breaking through key support levels, triggering long stop-losses, and then the forced liquidations in the contract market further pushed down the spot price, forming a 'waterfall decline.' Looking at the 24-hour trading volume, which surged from tens of millions of dollars to $45 million, at least half of that was contributed by liquidation orders. This is a typical tactic of 'leverage accelerating declines.'
Here’s a professional point to mention: the 'volatility trap' of small-cap coins. SAHARA's circulation rate is only 20.4%, meaning 80% of the coins have not yet circulated. In this case, as long as a small number of holders sell in a concentrated manner, it can trigger a massive price shock. Projects that institutions invest in often attract many retail investors to follow suit, and these retail investors tend to use leverage, which in turn increases the volatility of the project. In contrast, projects with high circulation rates and dispersed holdings are less likely to experience such flash crashes.
Now, the most critical question: is this wave of crash a 'buying opportunity' or a 'delisting warning'? We will judge from three dimensions:
First, look at the official response: the team has clearly stated that 'there are no safety risks or product issues,' and they have ruled out unlock selling pressure. This indicates that the project itself is not facing a fatal problem, but it may be due to short-term capital flight. However, the official response was a bit slow; several hours passed from the drop until they spoke out. This 'delayed response' in a panic market is inherently a negative signal—if there really are no issues, why not stabilize emotions at the first opportunity?
The second observation is on on-chain capital: apart from the large withdrawals in August, there have been no significant movements in institutional wallets recently, indicating that large funds have not completely fled yet, which may be short-term profit-taking. But we must be cautious moving forward: if prices continue to fall, will it trigger more panic exits from private placements? After all, some early investors may have costs lower than the current price.
Thirdly, consider the competitive environment: AI + crypto is still a hot sector, but there are currently too many projects in the space, with serious homogenization. If SAHARA can soon provide real testing data (like user numbers, transaction volume, AI model application scenarios), it might still have a chance to recover its valuation; but if it continues to rely only on 'institutional endorsements' to tell stories, it may continue to decline.
Lastly, a unique insight: this wave of crash is actually a 'signal of value return' in the crypto market. In recent years, many projects were able to raise funds just by relying on 'institutional lead investment + AI concepts,' but now with stricter regulations, funding has become more rational, and only projects that can truly deliver and have cash flow can survive. Projects led by institutions like Pantera will likely see more 'flash crashes' in the future—not because the institutions have poor vision, but because the market no longer buys 'story tickets.'
For retail investors or small players, there are three lessons that must be remembered:
Institutional endorsement ≠ capital preservation: even projects backed by Pantera can drop by 50%. Don't blindly follow institutional trends; stay away from high FDV small-cap coins: those with a circulation rate below 30% and FDV over three times the circulating market value should be avoided as the selling pressure risk is too high; avoid high leverage: small-cap coins are inherently volatile, and using leverage is like gambling with your life. How many people lost everything in liquidations last night?
To summarize: this wave of crash in SAHARA is a result of 'insufficient liquidity in small-cap coins + leverage liquidation + market panic,' not an institutional flight or project collapse, but it exposes the hidden danger of 'stories outweighing reality.' Right now, don’t rush to buy the dip; wait for the official investigation results, see if there is any capital inflow in the future, and check for product progress before making a decision.
