Solana slumps to 45-day low — Will SOL price bounce at $130?

#BinanceTournament #AirdropGuide #EarnFreeCrypto2024 #altcoins #bitcoin

Despite a brief rally to $151 on June 16, Solana’s native token SOL (SOL) has experienced a 24% correction since June 7. It has underperformed against the total cryptocurrency market capitalization that’s down 14% over the same period.

Several indicators, including Solana Network’s on-chain activity and demand for leveraged positions, indicate that SOL's bearish momentum is likely to continue. If demand remains stagnant, this could lead to a retest of the $130 level or lower.

Part of the reduced interest in cryptocurrencies can be attributed to the strong performance of the S&P 500 index, which reached an all-time high on June 17.

Stock market gains have been driven by tech stocks, and recent employment and consumer data suggest positive second-quarter earnings reports. Investors are pricing in a two-thirds chance that the U.S. central bank will begin cutting interest rates by September.

Despite the cryptocurrency market's higher potential, investors are concerned that the U.S. economy may not sustain its growth for much longer, given the high interest rates. This risk is particularly burdensome for altcoins like SOL, as Bitcoin (BTC) and Ether (ETH) have preferential access to institutional money through exchange-traded funds (ETFs).

Even if the crypto market experiences a rally in the coming months, the competition for smart contract-focused blockchains will be fierce. Multiple apps running on the Solana Network offer asset bridges to other blockchains that also compete by yield, airdrops, liquidity, and token launches.

Solana's native staking reward rate is only 1.3% above the SOL token inflation rate. In contrast, Ethereum offers a 2.8% effective reward rate due to its burn mechanism, which results in a mere 0.4% annualized inflation, according to StakingRewards. This directly impacts Solana’s total value locked (TVL), which has stagnated below $30 million since May.