- Solana price has crashed by over 85% from its all-time high.
- This decline is in line with what other coins are performing.
- The common outages have also impacted the price of Solana.
Solana price has been in a freefall in the past few weeks and is hovering near its lowest level since August 11th, 2021. The SOL token has crashed by more than 85% below the highest level in 2021. As a result, its total market value has plummeted to over $12.8 billion, making it the 9th biggest coin globally.
Why is SOL crashing?
There are several reasons why the Solana price is in a deep freefall. First, this decline is in line with the performance of other cryptocurrencies. A closer look shows that most digital coins, including Bitcoin and Ethereum have been in a strong bearish trend. As a result, the total market cap of all digital coins has crashed from over $3 trillion to the current $1.27 trillion.
This general decline is mostly because of the ongoing shift in monetary policy in the United States around the world. The Fed has committed to push interest rates to neutral level, which is around 2.5%. This level is substantially higher than where interest rates are currently.
The European Central Bank (ECB) is expected to signal that it will start hiking interest rates in July this year. It is expected to exit negative rates in September this year. Earlier on Tuesday, the Reserve Bank of Australia (RBA) surprised many investors by hiking rates by 0.50%.
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Second, Solana price is also falling because of the ongoing weakness of its ecosystem. A closer look at some of its biggest web 3.0 projects like StepN and Brave shows that they are lagging. Stepn’s GMT has seen its price crash by more than 80% in the past few weeks. At the same time, the total value locked (TVL) of Solana’s ecosystem has dropped to about $3.77 billion.
Third, Solana has disappointed investors and developers because of its persistent outages. Last week, the network went offline because of a runtime bug that was triggered by durable nonce transactions. That was the second outage in a month. As such, many developers will likely opt for other platforms like Ethereum and Avalanche.
Solana price prediction
The daily chart shows that the SOL price has been in a strong bearish trend in the past few months. The sell-off gained steam when it moved below the key level at $76. It has moved below the 25-day and 50-day moving averages and is approaching last month’s low of $34.8.
The MACD is also slightly below the neutral level. Therefore, Solana price will likely continue its bearish trend as bears target the key support level at $25.
