Solana (SOL) has booked a major 23% loss in the past 30 days, becoming the only token in the top 10 that has been pushed into correction territory during this period.
The past 24 hours were quite harsh for cryptocurrencies, as tech stocks sold off yesterday amid concerns about stricter regulation on artificial intelligence (AI) in the United States.
A shift in the country’s political landscape as a result of the Democrats’ victory during the mid-term elections is probably the reason why market sentiment has soured dramatically in the past few days.
This party has long opposed the advancement of the crypto industry in the country and was the one that shot down the Clarity Act recently in Congress.
Their view about new technologies is fairly conservative. Now that they will dominate the legislative scene once again, the current administration’s push for supportive legislation for cryptocurrencies in particular could face even stronger opposition.
Liquidations Spike While DEX Volumes Within Solana Shrink by 40%
Long liquidations spiked as a result of yesterday’s sell-off, with $1.1 billion worth of longs being wiped out in the past 24 hours alone.
For Solana, this was the fourth-largest single-day liquidation of long positions in the past 90 days, indicating a massive long squeeze in the making.
Meanwhile, exchange-traded funds (ETFs) linked to this altcoin experienced their first major monthly net outflow in the last 13 months. In October, investors took out $144 million from these vehicles, as SOL’s price structure turned bearish.
Moreover, DEX volumes reflect lower usage and demand for Solana’s DeFi applications. According to on-chain data from DeFi Llama, DEX volumes are heading for their sixth consecutive week of negative growth.
Compared to this metric’s late September peak of $17.3 billion, volumes could shrink by at least 40% by the end of this week.
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SOL Could Drop to $80 to Fill Previous Price Imbalances
Turning to the daily chart, Solana broke below the $95 support and lost the 200-day exponential moving average (EMA) as well last week as a result of the Binance hack news.
Even though the market attempted to recover multiple times, the selling pressure has increased dramatically in the past few days.
After retesting both of these supports from below, bulls have apparently capitulated. This sets the stage for the continuation of the downtrend to much lower price areas, potentially eyeing the $80 level as the next stop.
This is the midpoint of the token’s only fair value gap (FVG) dating back to the August rally. If the volume of buy orders at that level continues to be high, it is highly likely that we could see SOL recovering once it gets there.
The market has largely ignored the positive impact that the Alpenglow upgrade has had on Solana’s efficiency, which is typical bear-market attitude.
However, we believe that once sentiment improves, these positive project-specific developments could be rapidly priced in.
