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SOL price is approaching an annual low as Solana TVL sheds R138b in three days

Fears of DeFi contagion and bearish technicals indicate that the price of Solana will continue to fall. Solana (SOL) fell on June 16 as part of a broader decline in the top cryptocurrencies, fueled by the Federal Reserve’s 0.75% interest rate hike the day before.

Solana price recovery stalls

Notably, SOL/USD fell about 17% to R478 per token, wiping away nearly all of the day’s gains. According to Coinglass data, the SOL price volatility liquidated about R160 million worth of contracts in the last 24 hours across different crypto exchanges. The recent drops are an extension of SOL’s broader correction, in which it fell by more than 90% after a high above R4 276, in November 2021. SOL has also dropped to its lowest level since July 2021, close to R400.

Furthermore, a rising interest rate environment and the failure of high-profile crypto projects such as Terra have bolstered SOL’s downside potential.

SOL creates an “ascending triangle”

On June 16, Solana began a downward move after testing a horizontal trendline resistance near R545 that appears to be an “ascending triangle” pattern.

Ascending triangles are continuation patterns, which means they tend to drive prices in the same direction as their preceding trend. Breaking out of a triangle pattern in a bearish market, for example, pushes the price down by the maximum height of the structure.

If SOL falls below the bottom trendline of its ascending triangle, the bearish profit target will be below R360, as indicated in the chart below.

Solana’s downside target is around 25% below the price on June 16 and might be reached by the end of June. Nonetheless, if SOL recovers after testing the triangle’s lower trendline as support, the R545–R577 zone would be the interim upside objective.

SOL massive exit

Since June 13, almost 27 million Solana tokens have left its smart contract environment.

According to DeFi Llama data, the total value locked (TVL) inside Solana smart contracts was 74.65 million SOL (R35.9 billion) on June 16, down 27% in the previous three days. This equates to approximately R13 billion in withdrawals from the ninth-largest blockchain ecosystem in terms of market capitalization. Solend, a lending platform built on the Solana ledger, saw its TVL fall by 26.5 % in the last three days and was holding 9.66 million SOL ( 4.6 billion) as of June 16. Nonetheless, it is TVL’s primary platform within the Solana ecosystem.

The outflows indicate that depositors do not want to keep their SOL locked in DeFi protocols, a sentiment shared by the sector following the failure of Terra, an “algorithmic stablecoin” project, last month.

As a result, Solana’s path of least resistance is tilted to the downside in the short term, especially given the lack of improvement in macro and fundamentals.

SOL price is approaching an annual low as Solana TVL sheds R138b in three days

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at [email protected]

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