As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed the rise and fall of many promising assets. The current state of Solana (SOL) leaves me with a sense of deja vu – a familiar feeling that we’ve seen this before.
In Friday’s American trading session, Solana’s value increased by 0.3% to reach $135. This rise can be linked to several factors such as heavy selling from significant SOL holders, delays in the U.S.-based SOL ETF, and security vulnerabilities. Given that the Solana price may continue to correct for an extended period, other rising currencies might challenge Solana’s dominance soon.
Is Solana Losing Its Edge? 5 Reasons It Could Be Dethroned Soon
Over the past three weeks, the Solana daily price chart indicates a significant drop from $162 down to $132, representing a 18.7% decrease. This downturn suggests a bearish reversal, continuing a six-month trend of consolidation and demonstrating that sellers are currently in control of the market’s direction. Here are five potential factors that could cause Solana (SOL) to relinquish its position as the fifth largest cryptocurrency:
Solana ETF Approval Faces Delays
As a crypto investor, I was eagerly anticipating the launch of a Solana-based ETF in the U.S., given the impressive performances of Bitcoin and Ethereum ETFs. However, my hopes were dashed when the U.S. Securities and Exchange Commission (SEC) postponed its approval for various reasons, such as apprehensions about regulatory compliance and potential market risks.
Furthermore, the senior ETF analyst at Bloomberg, Eric Balchunas, stated
“In my opinion, it’s extremely unlikely that another election will take place in 2024 or 2025 if Kamala Harris becomes president in 2021. The only scenario where there might be a chance is if Donald Trump wins again.
As a researcher studying the impact of market factors on Solana’s native cryptocurrency, I have come to realize that any extended hold-ups in the approval process for the SOL ETF could potentially diminish investor interest and enthusiasm. This, in turn, might foster a bearish sentiment among investors regarding Solana’s native cryptocurrency.
Security Vulnerabilities and Scams
This past week, malicious individuals targeted supporters of cricket in India by unlawfully accessing a high-profile account with the intent to publicize the Solana-linked token ‘HACKERS’. Despite their efforts falling short, this incident sparked worries regarding the safety of the system.
Manipulative schemes might significantly erode a user’s faith in the platform, potentially leading them to prefer safer blockchain networks instead. This shift could potentially lower the value of Solana due to reduced demand.
FTX/Alameda Unstaking Solana
Based on Lookonchain’s information, a wallet associated with FTX and Alameda has withdrawn over a billion dollars’ worth of Solana (SOL). Over the past three months, this entity has unstaked approximately 530,000 SOL (approximately $71k) and moved it to various other accounts.
This has resulted in an average unstaking of around 176.7K SOL per month.
Even though FTX/Alameda holds approximately $7.06 million in Solana (equivalent to around $945.7 million), the ongoing process of unstaking may exert additional selling force on the Solana market price.
Over $1B worth of $SOL is being unstaked by FTX/Alameda!
Over the last three months, FTX/Alameda has moved approximately 530,000 Solana tokens (worth around 71,000 USD), distributing them across various accounts. This translates to an average of about 176,700 Solana tokens (or roughly 23.5 million USD) being moved each month.
FTX/Alameda still has 7.06M $SOL($945.7M) staked.…
— Lookonchain (@lookonchain) September 13, 2024
Emergence of New High-Performance Blockchains
The rise of cutting-edge blockchains, including Aptos, Sui, and Avalanche, is gradually posing a threat to the leading position held by established networks such as Solana. These advanced blockchain platforms offer quicker transactions, robust security, improved scalability, and groundbreaking consensus mechanisms.
If another blockchain becomes popular, Solana could encounter intensified competition, particularly given the recent postponement of ETF approval, a rise in scams, and significant sell-offs by major investors. As a result, developers and projects might opt to move their decentralized applications (dApps) to more robust and rapidly evolving platforms, potentially leading to a gradual reduction in Solana’s market value.
Check out the detailed analysis and prediction in our Top layer-1 crypto article.
Solana Price Risk Major Support Breakdown
As an analyst, I’m observing a persistent selling pressure that might cause the Solana price to descend by approximately 22%, potentially dipping towards the $105 level which aligns with the range bottom support. The current price action of Solana seems to be influenced by this rectangle structure, clearly demarcated by two downward-sloping trendlines.
A RSI (Relative Strength Index) reading below 50% suggests that sellers have more control. If the price of Solana were to fall below $105, this could indicate a significant drop in its price prediction, creating an opportunity for other blockchains to potentially unseat Solana.
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2024-09-13 19:30