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Solana's 12.75% Drop Signals Potential Further Decline Amidst Market Turmoil
Solana's (SOL) price has plummeted by 12.75% within 24 hours, hitting a three-week low of $112.50. This sharp decline is attributed to a combination of factors, including Trump's "Liberation Day" tariff announcement, a bearish shift in the futures market, and concerning technical indicators.
The significant global tariffs announced by Trump on April 2nd have triggered a risk-off sentiment across the cryptocurrency market, impacting Solana significantly. Its correlation with the Nasdaq 100 has been highlighted once again, as both experienced simultaneous declines.
Futures Market and Funding Rates Indicate Bearish Sentiment
The annualized rolling basis in the Solana futures market has drastically fallen from 18% on November 18, 2024, to below 0% as of April 3rd. This shift indicates that traders are no longer willing to pay a premium for leveraged long positions, reflecting a sharp decline in bullish expectations.
Solana's funding rate has also deteriorated rapidly. The weekly funding rate, which was 0.14% on April 2nd, dropped to -0.0462% within a day. This implies that short positions are now paying long positions, signaling a dominance of bearish traders.
Technical Analysis Points to $96 Target Amidst Bear Flag Pattern
From a technical analysis perspective, Solana's breach of the lower trendline of a "bear flag" pattern is concerning. This pattern is typically interpreted as a continuation signal, suggesting a potential further decline to a target of $96.
Solana ETF Filing by Fidelity Offers Potential Counterbalance
Despite the bearish technicals, the U.S. Securities and Exchange Commission (SEC) has officially acknowledged Fidelity's S-1 filing for a Solana ETF. Whether this ETF application can act as a catalyst for a price rebound remains to be seen.