Why is Solana (SOL) worth down at the moment?


Solana (SOL) is seeing a worth correction after rallying almost 300% in current months.

Why is Solana worth down at the moment?

As of Nov. 21, SOL’s worth was buying and selling for $55, down 20% when measured from its native excessive of $60.50 established simply 5 days prior. The decline mirrors related strikes elsewhere within the crypto market, with prime cash, Bitcoin (BTC) and Ether (ETH), additionally down 2.2% and 5.5% from their native highs.

SOL/USD versus BTC/USD and ETH/USD year-to-date efficiency. Supply: TradingView

Let’s talk about the foremost causes behind Solana’s stoop.

SEC labels SOL a “safety”

Solana’s worth decline coincides with the U.S. Securities and Change Fee’s (SEC) newest lawsuit towards the Kraken crypto trade. In its filings on Nov. 20, the watchdog accused Kraken of breaking securities legal guidelines.

Whereas doing so, the SEC labeled a bunch of cryptocurrencies as securities, together with Solana. SOL’s worth has declined 10.25% since.

Different tokens named within the SEC lawsuit fell equally, together with ADA, whose worth decreased 5.5% after the Kraken information. 

ADA/USD 4H worth chart. Supply: TradingView

The SEC’s potential designation of SOL as a safety might have an effect on its availability on U.S. cryptocurrency exchanges, much like the impression seen with XRP.

Overbought correction

SOL’s worth drop at the moment is a part of an overbought correction that started after its each day relative power index (RSI) jumped above 70.

As well as, Solana’s correction got here after a interval of rising divergence between its rising costs and falling RSI, indicating bullish exhaustion. 

SOL/USD each day worth chart ft. bearish divergence. Supply: TradingView

Over $6.5 million price of longs liquidated

Solana’s decline additional coincides with $6.5 million price of lengthy liquidations throughout its spinoff markets since Nov. 20. Compared, almost $2 million price of shorts had been liquidated.

SOL complete liquidations each day chart. Supply: Coinglass

When a protracted place is liquidated, the dealer is compelled to promote, resulting in elevated promoting strain. 

Is the Solana bull market over?

Worth chart technicals recommend that Solana’s worth correction has begun close to a key Fibonacci retracement stage, which limits its upside bias within the coming months.

The 0.236 Fib line is close to $67.40, which has acted as resistance since summer time 2022. 

SOL/USD weekly worth chart. Supply: TradingView

The mix of those bearish elements raises SOL’s potential of extending its correction within the coming days or even weeks. That begins with a decline towards $47.50, a flipped-support stage, adopted by an prolonged selloff towards $30, if the previous stage breaks.

The $30-level, down 50% from present costs, coincides with Solana’s 50-week exponential transferring common (50-week EMA; the pink wave) and the higher trendline of its earlier ascending channel sample.

Associated: Crypto group responds to Kraken lawsuit, Deaton slams ‘dishonorable’ Gensler

Conversely, SOL’s worth might rebound forward or after testing $47.50 to its year-to-date excessive close to $68.