Solana’s SOL Token Price Drops by 2% in 24 Hours: Reasons and Analysis
The price of Solana’s native token, SOL (SOL), has experienced a 2% drop in the last 24 hours, reaching $173.20. This decline is part of a correction that began two days ago, resulting in an overall decrease of approximately 8.25% so far.
One of the main factors driving the decrease in SOL’s price is the outperformance of its layer-one blockchain rival, Ether (ETH), as well as increasing outflows from the Solana ecosystem.
The decline in SOL’s price can be attributed to the increasing likelihood of approval for spot Ether exchange-traded funds (ETFs) in the United States. The SOL/ETH pair has dropped by 22.65% since May 20, when the U.S. Securities and Exchange Commission (SEC) contacted Ether ETF applicants to update their filings.
ETFs are popular investment vehicles that allow investors to gain exposure to an asset without owning it directly. If spot Ether ETFs are approved, it could lead to increased demand for ETH, potentially causing funds to flow out of Solana’s ecosystem and into Ethereum.
Additionally, the total value locked (TVL) across the Solana ecosystem has decreased significantly in May, indicating reduced confidence in the platform. The news of potential approval for spot Ether ETFs on May 20 may have contributed to the outflows from the Solana ecosystem.
From a technical perspective, Solana’s price declined after its daily relative strength index (RSI) approached the overbought level of 70. The cryptocurrency is currently fluctuating inside a Fibonacci level range, with $186 acting as resistance and $173.50 as support. There is a possibility that SOL may fall towards the lower trendline in May, aligning with the 50-day exponential moving average (50-day EMA) at around $155.75.
Overall, the recent price drop in SOL reflects the impact of external factors such as the potential approval of spot Ether ETFs and increasing outflows from the Solana ecosystem. Investors and market participants will be closely monitoring the developments in the cryptocurrency market to gauge the future performance of SOL.