According to the Cointelegraph: The price of Solana's native token, SOL, has fallen by 3.45% over the last 24 hours, reaching approximately $143.50 on June 15. This underperformance contrasts with a broader crypto market decline of around 1.5% during the same period. Several catalysts are driving SOL's price lower:
1. Weakness in SOL/ETH Pair
- SOL/ETH Pair Performance: The SOL/ETH pair has dropped 22.65% since May 20, primarily due to increasing interest in Ethereum, especially regarding potential regulatory approvals for spot Ether exchange-traded funds (ETFs) in the United States.
- Market Share Shift: Solana's market dominance decreased from 3.30% to 2.82%, while Ethereum's share increased from 15.78% to 18.04% over the same period.
2. Stagnant Inflows into the Solana Ecosystem
- Investment Vehicle Inflows: CoinShares' report shows that Ether investment vehicles attracted $68.9 million in the week ending June 8, compared to Solana’s modest $0.7 million in inflows.
3. Declining Solana Network Usage
- Total Value Locked (TVL): Stagnant TVL metrics across the Solana ecosystem indicate a decline in network usage. Key projects like Jito, Marinade, and Kamino have all seen modest declines in their SOL reserves over the last 24 hours.
- DEX User Decline: A decreasing number of decentralized exchange (DEX) users on Solana's blockchain is contributing to the sell-off of SOL holdings, increasing selling pressure without a corresponding rise in buying demand.
4. Broader Market Factors
- Broader Crypto Market Correction: SOL's price decline is part of a broader market correction.
- Rising U.S. Dollar Index: The increase in the U.S. dollar index points to a dwindling risk appetite among investors.
Technical Analysis
Multiphase Decline
- Multi-Week Descending Trendline: Since retesting its multi-week descending trendline as resistance on June 6, SOL/USD has dropped over 18%.
- Multi-Month Ascending Trendline Support: As of June 15, SOL is testing this key support level for a potential rebound toward the 50-day exponential moving average (50-day EMA) at around $158.65—representing a potential 13.50% gain from current levels by the end of June.
Potential Downside Risk
- Break Below Trendline Support: If SOL breaks below this support, the next target could be the 200-day EMA at around $129.50.