In the past day, the value of SOL, the native token of Solana, has decreased by 3.45%, landing at roughly $143.50 on June 15. This performs worse than the entire cryptocurrency market, whose valuation fell by about 1.5% during that time. The two main factors that are now pulling down the price of SOL are sluggish inflows into the Solana ecosystem and Ether, an outperforming alternative layer one blockchain. Due to a wider decline in the cryptocurrency market, SOL’s price is declining. Nevertheless, in light of the growing likelihood of regulatory approvals for spot Ether exchange-traded funds (ETFs) in the US, the cryptocurrency is lagging the market.
For example, since the U.S. Securities and Exchange Commission (SEC) contacted Ether ETF applicants to amend their 19b-4 filings on May 20, the widely-tracked SOL/ETH pair has lost 22.65%. The news about the Ether ETF also aligns with Solana’s diminishing market dominance. Since May 20, ETH’s cryptocurrency market share has increased from 15.78% to 18.04%, while SOL’s has decreased from 3.30% to 2.82%.Furthermore, Ether investment vehicles attracted $68.9 million in the week ending June 8, far more than Solana’s $0.7 million inflows during the same period, according to CoinShares’ weekly report.
The price drop of SOL today is consistent with a total value locked (TVL) indicator that is stationary throughout the Solana ecosystem. Furthermore, over the past day, the SOL reserves of Jito, Marinade, and Kamino—three of TVL’s top projects in Solana—have somewhat decreased.Investor caution is probably reflected in the concurrent fall in SOL’s price and project reserves, perhaps as a result of expected market downturns brought on by outside forces. For example, this week’s price drop in SOL was accompanied by an increase in the US dollar index, suggesting a declining willingness to take on risk. The steep fall in SOL’s price today comes after a daily calculation of the number of decentralized exchange users on its blockchain. Users may sell off their SOL holdings as they depart from the DEXs or the ecosystem. Price reductions usually result from this increased selling pressure when there is no commensurate increase in buying demand.Technically speaking, the current price decrease for SOL is a continuation of a correction that began on June 6 when the stock retested its multi-week descending trendline as resistance. Since then, the SOL/USD pair has fallen by more than 18%.
SOL was testing its multi-month ascending trendline support as of June 15 in anticipation of a possible bounce toward its 50-day exponential moving average (50-day EMA; the red wave) at roughly $158.65 by the end of June, up about 13.50% from the present price levels. A break below the trendline support, on the other hand, could signal a fall toward the 200-day EMA, or “the blue wave,” which is located at $129.50.