Solana Price Has Taken a Serious Hit Over the Past Week. Why?

Solana is one of the most promising digital assets in crypto space, with a skilled development team. Yet Solana price has taken a serious hit over the past week. Why?

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Jay Crypto

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Last updated Sep 1, 2022 at 5:07 PM

Posted Sep 1, 2022 at 4:00 PM

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We will look at the technical side along with the major happenings in the Solana ecosystem that might have led the asset to this position. Let’s first examine the current state of the asset. 

Solana: Current Scenario 

Without a doubt, Solana is a great project with an experienced team of developers. However, the current price of the asset is not a good sign for SOL holders. According to CoinGecko, Solana’s price is down by more than 5% over the last 24h.  SOL saw its all-time high ten months ago in November 2021, but now it has lost almost 88% value. A day before, SOL faced a beating by more than 10% in value. 

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Source: CoinGecko

Over the past week, the price of the asset has gone down by more than 12%. The development of the project has slowed down. What could be the reason for this blowback? The bearish sentiment of the crypto market has led many investors to believe that SOL is going to retest the $26 support for one more time. 

Some experts believe that Jerome Powell's statement is causing problems for the whole crypto market including SOL. Let’s try to find some explanation for this from a fundamental analysis. 

Fundamental Analysis

Is Jerome Powell to Blame For this Mess?

The Federal Reserve has never been very good for the crypto ecosystem. Recently, Jerome Powell made some hawkish comments on inflation and price stability in his speech. He specifically mentioned forcing a policy to bring down inflation so as to stabilize prices in the US. 

Previously in 2020 during the pandemic,  the Federal Reserve printed money to bring down inflation. Economic experts say that such policies always lead economies to recession. The impact of the new statement was seen not only in the crypto market but in all other markets, too. The S&P 500 index fell by 2.15%, the Nasdaq posted a 2.7% decline, and the Dow Jones Industrial Average also went down by 1.8%. Let’s see the impact of Powell's statement.

What was the Impact of Jerome Powell's Statement?

The comments of the Federal Reserve's chairman impacted the crypto market badly. All major assets of the crypto market were painting the market red. The data from CoinGecko reveals that more than 121k traders were liquidated, losing almost $380 million. 

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Source: CoinGlass

Yes, you read it right. This was the cost of a single statement. Such FUDs create bearish sentiment in the market. The development activity indicator also reveals these effects on the Solana network. According to Santiment, the network had been moving steadily but has recently experienced a slight decline. 

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Source: Santiment

The Solana ecosystem is showing some signs of relief this week, though, with some unexpected winners. In the wake of the most recent devastation, some of these protocols have increased activity along with token ownership. Let’s take a look at the technical side of the SOL to get a clear picture.

Where is Solana Heading Now?

SOL is trading alarmingly above the $30 support level. The demand zone at $29 might be reached if the support is broken, so traders must exercise caution.

Although there is a small RSI divergence, traders should wait until SOL begins to reverse before buying again at this level because doing otherwise could be dangerous. The bulls must regain control right away because a breach of the support could signal the beginning of the second leg of a significant decline.

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Source: TradingView

The image above depicts both support and resistance for the asset. The price mobility of Bitcoin can very much affect the whole analysis. This week may be critical for SOL. There is a huge demand around the $29 price. If the asset falls that deeply, it may take months to recover. 

Conclusion

The volatility and downtrend in the Solana price might be an indicator of another bearish cycle in the crypto market. Even though the price of the asset has seen a significant drop, some of the projects in the Solana ecosystem are performing very well. Investors must act cautiously during this time of price volatility. This article should not be considered as a piece of financial advice.

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