Solana's SOL Drops amid Network Issues and U.S. Economic Downfall
Summary:
Solana's native token, SOL, experienced a 3.85% decline, dropping to $142 on April 25. This drop is attributed to the unresolved network congestion issues admitted by Solana developers and the underwhelming U.S. economy report. The unresolved network issues continue to play a key role in SOL's market performance. Future expectations for the U.S. Federal Reserve rate cuts and rising yields have also negatively impacted the value of SOL, causing downward pressure on its price. The price reduction is also linked to a prevailing rising wedge pattern breakdown in the market.
On April 25, Solana's in-house token, SOL (SOL), underwent a dip of approximately 3.85%, settling at $142. This dip is a continuation of a previous adjustment which began when SOL hit a local high of around $160, equating to an over 11% decrease since then. The performance of SOL has been negatively impacted by several factors, including the announcement by Solana developers that issues causing network outages have yet to be resolved, and a weaker than expected U.S economy report.
The network congestion problems of Solana remain unfixed, as claimed by Mert Mumtaz, CEO of the Solana-based development platform Helius and a key member of the Solana developer community. He disputed a post by data analytical firm SolanaFloor, which contended that the network issues were entirely resolved due to diminished transaction confirmation times. Instead, Mumtaz clarified that the network's functional hurdles are persisting.
Following Mumtaz's tweet, SOL hit its local peak and thereafter, the cryptocurrency's price plummeted by approximately 11%. This suggests that the ongoing status of Solana's network continues to significantly impact the market.
Traditionally, Solana's prices have notably dropped due to network stability issues, such as when prices fell almost 14% after a network malfunction.
Solana's price, like many other cryptocurrencies, was today shaken by the notably slow U.S. economy and lasting inflation pressures. For example, the U.S economy's GDP saw an advancement of 1.6% in 2024's first quarter, underperforming expectations. However, core inflation increased from a 2% annualized rate to 3.7%, making a near-term interest rate cut improbable.
According to CME, Swap traders are expecting 33 basis points of Federal Reserve rate cuts in 2024, which is a substantial drop from the more than six quarter point cuts predicted at the start of the year.
Furthermore, enduring high interest rate expectations have pushed the yield on the standard U.S. 10-year Treasury note to 4.73% as of April 24, a five-month high. Such higher yields reduce the attractiveness of riskier assets, including cryptocurrencies and stocks, exacerbating the downward pressure on Solana's price.
In addition, the falling SOL prices are a part of a breakdown resulting from an ongoing rising wedge pattern. On April 24, the price of Solana's (SOL) dropped after breaking below its rising wedge pattern, marked by two ascending and approaching trendlines, coupled with increased trading volumes.
Typically, after a rising wedge pattern occurs, prices may drop by the max height of the wedge, which led to the decreased SOL prices on the 24th and 25th of April.
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Published At
4/25/2024 7:03:02 PM
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