In the span of just 48 hours, the fortunes of Solana (SOL -0.16%) have seemingly turned upside down. Just two days ago, analysts were lauding Solana for its major new Alphabet (GOOGL -0.95%) partnership involving Google Cloud, and some thought the price of Solana might be ready to take off again. But then came the crypto crash of Nov. 8 and the spectacular collapse of cryptocurrency exchange FTX (FTT -1.64%). The price of Solana tanked, falling more than 30% in the span of just 24 hours. 

While all cryptos were pulled down by the drama surrounding FTX, Solana seems to have suffered far worse than any of its peers. Cardano (ADA -2.05%), for example, fell 7.3%, and Ethereum (ETH 1.55%) declined about 16%. That has led many crypto analysts to explore the relationship between Solana and FTX, with some hypothesizing that Solana may have been collateral damage in FTX's frenzied efforts to remain solvent. If that's the case, then there are three key questions investors need to ask before they invest in Solana.

How did Solana wind up being collateral damage?

The short answer, quite simply, is that Sam Bankman-Fried, who resigned Friday as chief executive officer of FTX, has a close relationship with Solana that many in the crypto world have known about for some time. In fact, Bankman-Fried is known as one of the most prominent supporters of Solana, and his investment firm helped to lead a $314 million funding round for Solana in 2021. Speculation has persisted for some time that a significant portion of Bankman-Fried's wealth is tied up in Solana.

Shocked investor looking at laptop screen.

Image source: Getty Images.

Thus, when the crypto crash occurred on Nov. 8, traders knew exactly what was going to happen. Within hours of the bank run on FTX that wiped out its liquidity, rumors were circulating that in a bid to remain solvent, Bankman-Fried was selling off positions. That meant dumping Solana in order to have enough liquidity to prop up FTX. As other investors caught wind of what was happening, it triggered a market contagion in which people began selling everything. In the wake of the carnage, most can agree that the rapid plunge of Solana was exacerbated by its relationship with Bankman-Fried. That explains why Solana fell so much faster and harder than any other crypto.

What is going to happen to Solana now?

This question is a lot harder to answer because a variety of scenarios are possible. In the best case, the aborted Binance (BNB 0.68%) deal for FTX is revived and goes through, the crypto market stabilizes, and Solana regains some of its losses. Traders will realize that they may have oversold Solana in their panic, and some measure of normality will return. We might even see a short-term bounce for Solana.

In the worst case, Solana could continue to tank as traders and investors start to unravel some of the threads binding together Solana and Bankman-Fried. There is a surprising amount of schadenfreude in the market right now concerning Solana, with some claiming that Solana has been unfairly supported and promoted by billionaires for much of its existence. Some have even suggested that the price of Solana might fall from its current level of $18.50 to $3. That $3 price has specific significance because it is the price that Bankman-Fried famously offered to buy Solana from a bearish investor back in January 2021.

Is Solana a long-term buy?

In the short term, of course, Solana is a tremendously risky and speculative buy. This is not the best time to bet big on Solana unless you are willing to lose everything. But, if you take a long-term view of Solana, it's hard not to be impressed with all the positive momentum happening right now. Solana continues to launch new strategic initiatives, such as Solana Pay and Solana Mobile. It continues to partner with great companies, such as Google. And it continues to gain market share in key areas, such as the non-fungible token (NFT) market.

Yes, Solana has suffered a huge setback this week. But if you understand the full back story behind Solana and FTX, then it's a lot easier to see what's going on here. Solana was simply collateral damage in what some are describing as an attempted hostile takeover of FTX. The underlying metrics and fundamentals for Solana have not changed. Only investor perceptions have. For that reason, I'm still bullish on the long-term prospects for Solana.