The price of Solana has not been spared in the latest cryptocurrency sell-off. SOL, the ecosystem’s native coin, is now trading at $124, its lowest level since September 22nd. It has dropped by more than 51% from its peak in November of last year.
What is causing SOL to crash?
Solana is one of the most well-known Ethereum-killers. It is a major network, with a total market valuation of over $39 billion, making it the world’s sixth most valuable cryptocurrency.
Solana had a market valuation of moreover $75 billion at its peak, suggesting that its shareholders had lost more than $36 billion in the last two months. While this is unfortunate, Cardano investors have lost more than $50 billion.
There are various reasons why the price of Solana has plummeted in recent months. To begin with, Solana, unlike other blockchain platforms, is notorious for frequent downtime. Last year, the network was down for the whole weekend. It has also been the target of a distributed denial of service (DDoS) assault this year.
As a result, although the network has improved, some developers have switched to more reliable platforms like Terra, NEAR, Hedera Hashgraph, and Avalanche.
Second, the price of Solana has dropped because of increased competition in the smart contract market. According to Defi Llama, around 50 Defi applications have been developed in Solana, with a total value locked (TVL) of $9.3 billion.
While this is a significant amount, it is much less than the all-time high of almost $15 billion. Furthermore, a thorough examination of the industry reveals that other networks like Fantom, Cronos, and Arbitrum are developing at a quicker rate.
Third, other external issues like restrictions and increased borrowing rates are mostly to blame for the price drop in Solana.
Price forecast for Solana
The price of Solana has been in a strong negative trend for the last several months, as seen on the daily chart. It has managed to fall below the critical support level of $150, which was the previous week’s high.
The currency has fallen below the 200-day moving average as well as the 50% Fibonacci retracement line. The Relative Strength Index and the Moving Average Convergence Divergence (MACD) have all dropped.
As a result, there’s a chance the SOL price may continue to decrease as bears eye the critical support level at $101, which is also the 61.8 percent Fibonacci retracement level.