SEC Lawsuit and Market Corrections Drive Solana’s Price Down
Summary:
Solana's price is experiencing a correction phase following a recent 300% surge. The decline corresponds with the SEC's lawsuit against crypto exchange Kraken and the subsequent categorization of certain cryptocurrencies, including Solana, as securities. Additionally, Solana's dip is linked to an overbought correction as well as $6.5 million worth of liquidations across its derivative markets. Technical analysis suggests the onset of Solana's price correction could result in drops toward $47.50 and potentially $30 if resistance breaks.
Solana's value, which recently experienced a nearly 300% surge, is currently undergoing a price adjustment. On 21 November, it traded at $55, 20% below its recent top mark of $60.50 established only five days prior. This is a trend visible across the broader cryptocurrency market, with flagship coins Bitcoin and Ether also falling 2.2% and 5.5% respectively from their recent peaks.
Solana's curb in price correlates with the new lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against cryptocurrency exchange, Kraken. The regulatory body has implicated Kraken in securities regulation breaches and simultaneously categorized numerous cryptocurrencies, including Solana, as securities. Since the lawsuit, Solana's value has dropped by 10.25%. Other tokens listed in the SEC case, like ADA, have also seen their prices fall - ADA’s by 5.5%.
Such security labeling by the SEC could impact Solana's presence on American cryptocurrency exchanges, much akin to the ripple effect encountered by XRP.
Additionally, Solana's downward trend can be attributed to an overbought correction that set in when its daily relative strength index (RSI) surged past 70. This corrective phase emerged against a backdrop of an increasing divergence between Solana's climbing prices and falling RSI, suggesting a fatigue in bullish behavior.
Compounding Solana's dip in value are liquidations worth $6.5 million in its derivative markets since 20th November. By contrast, only nearly $2 million worth of shorts were liquidated. Such a liquidation of long positions compels traders to sell, amplifying the sell pressure.
Technical analysis of the price chart indicates an onset of price correction for Solana around a pivotal Fibonacci retracement level, thus constraining growth prospects in the near future. The 0.236 Fib line is proximate to $67.40, a price point that has posed a resistance since the summer of 2022.
Considering these downside drivers, Solana may witness a further price drop over the ensuing days or weeks. It might first edge down towards $47.50, a previous resistance-now-support level, and then, potentially, a protracted drop towards $30, should the former level give way. This $30 mark, half of its current price, aligns with Solana's 50-week exponential moving average and the upper trendline of its preceding ascending channel pattern.
However, Solana's price could bounce back before or after reaching $47.50, perhaps getting close to its annual high of approximately $68.
Please bear in mind that the information provided in this article should not be interpreted as investment guidance or legal advice. The observations, thoughts, and viewpoints conveyed herein solely belong to the writer and may not mirror or embody those of Cointelegraph.
Published At
11/21/2023 3:28:07 PM
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