Solana prices continued to encounter headwinds today, struggling to recoup their recent losses after dropping to their lowest in over a month.
SOL, the native token of high-bandwidth blockchain network Solana, reached as little as $79.09 this morning, CoinMarketCap data shows.
At this point, the cryptocurrency had down nearly 8% from the 24-hour high of $85.82 it attained the night before and was trading at its lowest since approximately December 19, additional CoinMarketCap figures reveal.
After suffering this notable decline, the digital asset experienced a modest recovery, encountering some volatility that saw it approach the $85 level this evening.
Even after enjoying these gains, the digital currency had not recouped the losses it experienced over the last 24 hours.
‘Overbought’ Market Conditions
When explaining the cryptocurrency’s latest declines, analysts highlighted a handful of crucial factors, for example voicing their concerns that the digital asset had grown overvalued as of late.
“Sol, like most of the rest of the crypto market, was terribly overbought leading into the spot BTC ETF approvals,” said Tim Enneking, managing director of Digital Capital Management, noting the U.S. Securities and Exchange Commission’s recent decision to “green light” applications for these exchange-traded funds.
Marouane Garcon, cofounder of a marketplace for perpetual futures called The Real-World Asset Exchange, offered a similar take on the matter.
“It seems like Solana’s recent drop can be attributed to a case of overbought conditions,” he stated.
Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also chimed in, choosing to focus on traders’ reaction to the bitcoin ETF news.
“I’m not seeing any major news or catalyst that has been driving the price of Solana down,” he stated. “Rather, I think this correction has been caused by the Bitcoin ETF approval becoming a, ‘Sell the news’ event.”
“Top market-cap crypto projects have remained correlated and have had a nice run-up into this catalyst, so it’s not uncommon to see such a pull-back after the event has passed,” Sifling emphasized.
Recent Gains
In addition to highlighting the aforementioned causal factors, Enneking pointed out additional variables he believes had a key impact on the recent price movements of the solana digital currency.
“In Sol’s case, however, the upward movement was compounded by the ‘FTX relief’ rally, as well as technical drivers within the project,” he said, referring to the gains the cryptocurrency markets have enjoyed amid strengthening investor sentiment.
While the digital asset’s price benefited from this situation, the tide has turned, Enneking noted, stating that “now, again just like virtually all of the crypto market, Sol is falling back.”
“Because it had more forces pushing it even, relatively speaking, than BTC and most other tokens, it is also falling back harder,” he stated, emphasizing that SOL has dropped more than most other major cryptocurrencies in the last 24 hours.
A Murky Outlook
Going forward, Enneking noted that the outlook for the digital currency markets is uncertain.
“The real question for BTC and most of the rest of the market is when will (or whether) the prospects of the BTC halving, as well as potentially being oversold, reverse this strong correction,” he emphasized.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
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