Why is Solana Price Down Today?
Key Takeaways:
SOL dropped 17% after a 14-month high on Nov. 1.
Solana’s arrested development activity threatens the price action.
FTX asset liquidations could hurt the altcoin.
YEREVAN (CoinChapter.com) – Solana (SOL) dropped 17% Nov. 2-3, reaching $39.5 ahead of New York hours. Notably, the coin briefly peaked at $47 on Nov. 1, after a whopping 350% rally year-to-date. Will the recent bearish reversal continue?
SOL price technicals bearish
SOL price has been charting through an ‘overbought’ territory since Oct. 19, meaning the coin’s relative strength index (RSI; purple graph) sustained above 70. In other words, the Solana bulls kicked the coin above its ‘fair’ value, as an RSI above 70 generally indicates a profitable market exit point.
Solana RSI has been overbought on two other occasions throughout 2023, in mid-January and mid-July. Both times, SOL lost at least 25% of its valuation, which hints at a possible bearish trend continuation in November.
If SOL drops further, the immediate short-term target will stand at the support-turned-resistance at $37.8, which has been relevant since 2021.
As the Solana token shot above the line in the recent rally, it could retest the level as support. However, if Solana bulls don’t double down, the SOL price could drop below the $37.8 line, pinning the next target at $28.
Meanwhile, the technical indicators might not be the only trigger behind the price decline.
Solana development activity down
According to the on-chain data tracker Santiment, Solana’s development activity has dropped considerably since Oct. 24 and declined to early March levels despite recent Amazon integration. Typically, development activity translates to user trust and, in turn, to higher token prices. Conversely, low development activity could suggest the opposite.
Moreover, NFT sales on Solana, which propelled the token price in Q2-Q3, have flatlined since mid-July.
Headwinds from FTX are back
A recent uptick in activity of FTX-owned crypto wallets in November rekindled concerns over possible selling pressure. A recent report by digital asset manager 21Shares asserted that the FTX-Alameda bankruptcy estate has recently moved $35 million worth of SOL tokens to exchanges, possibly to sell.
The bankrupt crypto exchange reportedly had $3.4 billion in various crypto assets in April, and as per January data, SOL holdings towered at $685 million.
Meanwhile, as previously noted, Michael Novogratz’s Galaxy Finance is managing the crypto holdings, and they make the most money the higher they can sell the SOL and other assets. Thus, it’s unlikely that Galaxy will short the token and get rid of it cheaply.
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Filed under: Bitcoin - @ November 3, 2023 5:14 pm