A seven-day loss of more than 50% sees Solana (SOL/USD) trading at half the value the previous week. The loss is the biggest among the cryptocurrencies in the top 100 categories, except for the embattled FTX exchange. SOL now trades at the lowest level since March 2021. Despite the magnitude, the cryptocurrency could fall further from various insights.
It is correct to assert that the decline in SOL reflects the liquidity concerns of the collapsed FTX exchange. The fears have caused widespread losses in the market, although SOL buyers have been hit hard. Data by Solana Compass shows that bear pressure on SOL could increase owing to the tokens that could enter circulation.
Solana Compass says an unprecedented number of SOL tokens are likely to be unstaked. Accordingly, 60,399,401 tokens of estimated $755 million value were shown as “deactivating.” As these tokens get unstaked, the total supply of SOL tokens in the market will rise by 8.8%, forcing further bear pressure.
Concerns about SOL’s increased supply come when Solana’s Epoch 370 ends. “Epoch” refers to the period when staking rewards are earned and then issued. During the period, validators lock their tokens and unlock them when it ends. The unlocking has been responsible for the huge price crash. Technical pointers also indicate a further bearish momentum after bulls lost a key level.
SOL crashes after losing the $28 support
Source – TradingView
On the weekly chart, SOL is oversold (RSI reading of 31) and is on a free fall. The key level at $28 was breached, welcoming a further bear market for the token.
Should you buy the SOL dip?
SOL is currently without breaks after crashing below $28. The only price direction at the moment is down. The token is not a recommended buy.
The likely support of SOL lies at $12, a potential decline of $25%. The established long-term support is at $3. With the bear market remaining in place, we cannot rule out SOL trading at a single-digit price.