The Solana price has deviated from Bitcoin and other cryptocurrencies. The SOL token has declined for the past four consecutive days and is trading at $142, which is about 35% below its all-time high. Its total market capitalization has declined to $42 billion, making it the 7th biggest cryptocurrency in the world.
Why is SOL tumbling?
There are several reasons why the Solana price has declined sharply even as Bitcoin has risen to the highest level in five months. First, the decline is mostly because sentiment among altcoins has waned in the past few sessions. Indeed, while BTC has risen, altcoins like Polkadot, Cardano, and even Ethereum have struggled. In most cases, there is usually a close correlation among different altcoins.
Second, the Solana price has declined because of profit-taking. As you recall, the coin’s price jumped sharply in August and early September. This rally happened as the demand for the so-called Ethereum-killers increased. In most cases, after an asset makes a strong rally, it enters what is known as a distribution zone. This is where buyers who bought during the ascent starts to distribute their holdings.
Third, the price is falling as activity in the network shows some signs of weakness. For example, the total value locked (TVL) of DeFi projects built on Solana’s network has dropped to $11 billion, according to data compiled by DeFi Llama. At its peak, these platforms had a combined value locked of more than $12.2 billion. Some of the biggest DeFi platforms built using Solana are Saber, Sunny, Raydium, and Serum, among others.
Stil, there are some positive happenings in Solana’s ecosystem. For example, in an announcement on Monday, FT US announced that it will launch its Non-Fungible Token (NFT) arm built on Solana’s ecosystem. This was a notable announcement since Solana is not known well for its NFT business.
Solana price forecast
The daily chart shows that the Solana price has been in a bearish trend in the past few days. The SOL token has already crashed by about 35%, meaning that it is in a deep bear zone. The coin has already dropped below the 25-day moving average. But it is still being supported by the 50-day moving average.
The coin has also moved to the Ichimoku cloud. Therefore, the path of the least resistance for the coin is to the downside. This means that it is at risk of crashing by about 18% to the key support at $115.55.
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