Fears of DeFi contagion and negative technicals increase to the price pressure on Solana.
Solana (SOL) fell on June 16 as part of a larger sell-off among the major cryptocurrencies, fueled by the Federal Reserve’s 0.75 percent rate rise the day before.
Solana’s price recovery is short-lived.
SOL/USD, for example, fell over 17% to $30 per token, wiping out virtually all of its gains since June 15. According to Coinglass statistics, the SOL price volatility liquidated about $10 million worth of contracts across different crypto exchanges in the last 24 hours.
SOL’s recent drops are part of a larger correction that saw the stock plummet by more than 90% after high above $267 in November 2021. SOL was trading for roughly $25 at its year low.
Furthermore, a rising interest rate environment, as well as the failure of high-profile crypto ventures like as Terra, have bolstered SOL’s negative potential.
“Ascending triangle” is a painting by SOL.
On June 16, Solana started a decline after attempting a horizontal trendline resistance around $34, which seems to be a “ascending triangle” pattern.
Ascending triangles are continuation patterns, which means they drive prices in the same direction as their preceding trend. In a bearish market, for example, breaking out of a triangle pattern usually sends the price down by the same amount as the structure’s highest height.
The bearish profit objective for SOL will be below $22.50 if it breaks below the bottom trendline of its ascending triangle, as seen in the chart below.
Solana’s downside goal is around 25% below today’s price, and he believes it will be met by June. If SOL rebounds after testing the triangle’s lower trendline as support, the $34-36 zone would be the intermediate upside objective.
SOL exit in droves
Since June 13, almost 27 million Solana tokens have left the smart contract ecosystem.
According to statistics recorded by DeFi Llama, the total-value-locked (TVL) within Solana smart contracts fell to 74.65 million SOL ($2.25 billion) on June 16, down 27 percent in the previous three days. This equates to almost $840 million in withdrawals from the blockchain ecosystem with the ninth-largest market capitalization.
Solend, a lending platform based on the Solana ledger, had its TVL drop by 26.5 percent in the past three days, and as of June 16, it held 9.66 million SOL ($290 million). Nonetheless, it is TVL’s most popular platform inside the Solana ecosystem.
The withdrawals show that depositors do not want to retain their SOL with DeFi methods, a feeling shared by many in the industry since the failure of Terra, a “algorithmic stablecoin” project, last month.
As a result, Solana’s path of least resistance remains tilted to the negative, especially given the lack of macro and structural improvement.
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