Solana’s SOL Price Drops by 2% in 24 Hours: What’s Driving the Correction?
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 contributing to the drop in SOL’s price is the outperformance of its layer-one blockchain rival, Ethereum (ETH), as well as increasing outflows from the Solana ecosystem.
The decline in SOL’s price coincides with 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 the Solana ecosystem and into Ethereum.
Additionally, the total value locked (TVL) across the Solana ecosystem has decreased significantly in May, indicating a loss of confidence in the platform. The news of potential Ether ETF approval on May 20 may have accelerated the outflows from the Solana ecosystem.
From a technical perspective, SOL’s price declined as its daily relative strength index (RSI) approached the overbought level of 70. A resistance confluence around $186 intensified selling pressure, leading to the current price level of $173.20.
Looking ahead, SOL is trending inside an ascending parallel channel, with a lower trendline target aligning with the 50-day exponential moving average (50-day EMA) at around $155.75. This suggests a potential further decline of about 10.70% from current price levels.
It is important to note that this article is for general information purposes and should not be taken as legal or investment advice. The views expressed are the author’s alone and do not necessarily reflect those of Cointelegraph.
