Solana (SOL) is seeing a price correction after rallying practically 300% in latest months.
Why is Solana price down at the moment?
As of Nov. 21, SOL’s price 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.
Let’s focus on the foremost causes behind Solana’s droop.
SEC labels SOL a “safety”
Solana’s price decline coincides with the U.S. Securities and Exchange Commission’s (SEC) newest lawsuit in opposition to the Kraken crypto change. In its filings on Nov. 20, the watchdog accused Kraken of breaking securities legal guidelines.
While doing so, the SEC labeled a bunch of cryptocurrencies as securities, together with Solana. SOL’s price has declined 10.25% since.
Other tokens named within the SEC lawsuit fell equally, together with ADA, whose price decreased 5.5% after the Kraken information.
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 impact seen with XRP.
Overbought correction
SOL’s price drop at the moment is a part of an overbought correction that started after its daily relative strength index (RSI) jumped above 70.
In addition, Solana’s correction got here after a interval of rising divergence between its rising costs and falling RSI, indicating bullish exhaustion.
Over $6.5 million price of longs liquidated
Solana’s decline additional coincides with $6.5 million price of lengthy liquidations throughout its by-product markets since Nov. 20. In comparability, practically $2 million price of shorts have been liquidated.
When an extended place is liquidated, the dealer is compelled to promote, resulting in elevated promoting stress.
Is the Solana bull market over?
Price chart technicals recommend that Solana’s price 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.
The mixture of those bearish components 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 crimson wave) and the higher trendline of its earlier ascending channel sample.
Related: Crypto community responds to Kraken lawsuit, Deaton slams ‘dishonorable’ Gensler
Conversely, SOL’s price might rebound forward or after testing $47.50 to its year-to-date excessive close to $68.
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