Why is Solana (SOL) price down today?

1 week ago 4

Solana’s native token, SOL (SOL), is down 5.5% on Dec. 10 amid significant corrections and over $1 billion in liquidations across the broader cryptocurrency market.

Data from Cointelegraph Markets Pro and TradingView shows SOL trading 17% below its $263 all-time high reached on Nov. 24.

Cryptocurrencies, DApps, Markets, Cryptocurrency Exchange, Decentralized Exchange, Market Analysis, Solana

Let’s look closer at the factors driving SOL price down today.

Marketwide sell-off weighs down SOL price

Solana corrects alongside other cryptocurrencies, which have also dropped, triggered by an overheated market and Bitcoin’s failure to hold above $100,000.

Bitcoin (BTC) remained relatively unchanged with 2% losses, while top tokens and midcaps recorded their worst losses in recent months following a sharp drop during the early Asian trading hours on Dec. 10.

Ether (ETH) has dropped more than 4.6% over the last 24 hours to trade at $3,735.

Other top-cap cryptocurrencies, including BNB Chain’s BNB, XRP (XRP) and Dogecoin (DOGE), have also posted significant losses over the last 24 hours. Tron (TRX) posted the largest daily losses among the top-cap cryptocurrencies, down 13.8% today.

Similarly, the total crypto market cap has dropped by 4.5% over the last 24 hours to rest at $3.46 trillion at the time of publication.

“Bitcoin is failing to consolidate above $100K, likely suppressing buying in the overall market, “ FxPro chief market analyst Alex Kuptsikevich said in response to today’s corrections in the crypto market.

“Bitcoin’s inability to grow has negatively impacted altcoins.”

Solana-based tokens flash red

Solana’s bearishness on Dec. 10 coincides with an ongoing correction in the prices of tokens built on its network. Most are posting significant daily losses, as shown in the figure below.

Moreover, the overall market capitalization of all Solana-based tokens dropped from $361.8 billion on Dec. 9 to $342 billion on Dec. 10. The total trading volume increased by 137% in the past 24 hours, reinforcing the intensity of the sell-side activity.

Investors likely reacted negatively to the dropping value and market activity of tokens within the Solana ecosystem, resulting in the drop in SOL price.

This accompanies a decline in onchain activity within the Solana ecosystem, according to the data provided by Dune dashboard pump.fun. Today’s SOL price drop was preceded by a sharp drop in the number of network transactions.

The amount of daily transactions on the Solana blockchain has nearly halved since Nov. 20.

This indicates suppressed network activity, and less overall user interaction with the platform resulting in lower revenues from fees.

Additional data from Dune reveals a sharp reduction in Solana’s daily revenue, which currently stands at 12,361 SOL (~$2.7 million) on Dec. 9, down from a year-to-date high of 55,832 SOL (~12 million) on Nov. 23.

SOL’s market structure hints at a retest of $180

SOL’s drop today precedes a period of growing bearish divergence between its price and the relative strength index (RSI) in the daily timeframe.

SOL’s price recorded a series of higher highs between April and November. But, in the same period, its daily RSI descended, forming lower highs.

As a rule of technical analysis, a divergence between rising prices and a falling RSI indicates weakness in the prevailing uptrend, which can motivate traders to sell more at local highs.

This appears to what has happened as the rise in SOL price to all-time highs led to overbought conditions on Nov. 22 when the daily RSI hit 77, as profit-booking set in.

The bears now focus on immediate support at $210, and later, the former resistance, which was flipped to support at $200.

A daily candlestick close below this level would confirm the continuation of the downtrend. The next logical move would be to the psychological level at $180, marking a 16% decline from the current price.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Read Entire Article