- Solana price has been in a strong bearish trend in the past few hours.
- The drop happened after the latest US consumer inflation data.
Solana price dropped to the lowest level in more than a week as cryptocurrencies recoiled. The coin crashed to a low of $32.65, which was lower than this week’s high of $39. This drop also happened as investors waited for the upcoming Ethereum Merge.
Why is SOL sliding?
Solana and other cryptocurrencies started the week well as its price jumped to a high of $39 from last week’s low of $29.92. In the same period, Bitcoin jumped to $22,000 while the total market cap of all cryptocurrencies rose to more than $1.1 trillion.
The key trigger for this sell-off was the latest US inflation numbers that came out on Tuesday this week. These numbers revealed that the country’s inflation rose by 0.1% in August. Core inflation rose as the cost of food and other items remained elevated.
As a result, the US dollar index (DXY), which tracks the performance of the greenback soared to the highest level in almost 20 years. Stocks crashed, with the Dow Jones shedding over 1,200 points while the CBOE VIX index rallied.
Analysts believe that the Federal Reserve will continue with its hawkish tone in the coming months in a bid to fight the elevated inflation. Historically, cryptocurrencies like Solana and Cardano underperform in a period when the Fed is extremely hawkish.
Solana price has also crashed as activity in its network activity. Data compiled by DeFi Llama shows that the total value locked (TVL) in its ecosystem has crashed to just $1.3 billion. At its peak, it had a TVL of over $10 billion. NFT sales and volume in its ecosystem has also crashed.
Meanwhile, it is unclear whether the proposed integration of Helium into Solana will happen. Algorand and other platforms are making the case for Helium integrating with them instead of Solana. Helium is a leading blockchain that operates in the bandwidth industry.
Solana price prediction
The four-hour chart shows that Solana price nosedived sharply amid rising concerns about the network. As it dropped, it moved below the important support level at $34.61, which was the lowest level on July 26.
The coin has also moved below the 25-day and 50-day moving averages. At the same time, the Awesome Oscillator has moved below the neutral point while the Smart Money Index (SMI) has formed a bearish crossover. Therefore, there is a likelihood that SOL price will continue falling as sellers target the next key support at $29.90.
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