Why is Solana (SOL) price down today?
The price of Solana's native token, SOL, has fallen 3.45% in the last 24 hours to reach approximately $143.50 on June 15. This underperforms the broader crypto market, whose valuation has dropped by around 1.5% in the same period.
SOL/USD daily price chart. Source: TradingViewTop catalysts driving the SOL price lower these days include an outperforming layer-one blockchain rival, Ether, and stagnant inflows into the Solana ecosystem.
Solana suffers as Ethereum steals the limelight
SOL's price is falling due to a broader crypto market correction. However, the cryptocurrency is underperforming the market amid the increasing odds of regulatory approvals for spot Ether exchange-traded funds (ETFs) in the United States.
For instance, the widely-tracked SOL/ETH pair has dropped 22.65% since May 20, when the U.S. Securities and Exchange Commission (SEC) contacted Ether ETF applicants to update their 19b-4 filings.
SOL/ETH daily price chart. Source: TradingViewThe Ether ETF news further coincides with Solana's declining market dominance. Since May 20, SOL's crypto market share has fallen from 3.30% to 2.82% while ETH's crypto market share has risen from 15.78% to 18.04%.
Ether and Solana crypto market dominance comparison. Source: TradingViewMoreover, CoinShares' weekly report reveals Ether investment vehicles attracting $68.9 million in the week ending June 8, much higher than Solana's $0.7 million inflows in the same period.
Crypto funds net flows. Source: CoinSharesThese metrics indicate a relatively higher interest in ETH among compared to SOL, contributing to its price decline today and in recent weeks.
Solana network usage is declining
Today's decline in SOL's price corresponds with a stagnant total value locked (TVL) metric across the Solana ecosystem. What's more, Solana's leading projects by TVL, namely Jito, Marinade, and Kamino, have witnessed modest declines in their SOL reserves in the last 24 hours.
Solana and its top dapps TVL performance. Source: Defi LlamaThe simultaneous decline in SOL's price and project reserves likely reflects caution from investors, possibly due to anticipated market downturns led by external factors. For instance, SOL's price decline this week coincided with a rising U.S. dollar index, indicating a depleting risk appetite.
U.S. dollar index versus SOL/USD daily performance chart. Source: TradingViewSOL's price drop today further succeeds a sharp decline in the decentralized exchange users on its blockchain, calculated on a daily timeframe.
Total daily DEX users on the Solana blockchain. Source: Dune AnalyticsAs users leave the DEXs or the ecosystem, they might sell off their SOL holdings. This increased selling pressure, without a corresponding increase in buying demand, typically drives the price down.
SOL price in technical correction
From a technical standpoint, SOL's price decline today is part of a technical correction that started on June 6, when it retested its multi-week descending trendline as resistance. The SOL/USD pair has dropped by over 18% since.
SOL/USD daily price chart. Source: TradingViewAs of June 15, SOL was testing its multi-month ascending trendline support for a potential rebound toward its 50-day exponential moving average (50-day EMA; the red wave) at around $158.65—up circa 13.50% from the current price levels—by June's end.
Conversely, a break below the trendline support risks a decline toward the 200-day EMA (the blue wave) at around $129.50.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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