Here's What's Driving Today's Move Lower in Solana
Key Points
Today's widespread sell-off among certain risk assets has Solana investors in the red once again.
Today's drop of around 3% at lows suggests this momentum is overpowering any sort of upside catalysts investors can find.
Here's why I think today's selling pressure, and the bearish momentum we've seen in recent weeks, may be worth stepping into.
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Solana (CRYPTO: SOL) is one of the more intriguing cryptocurrencies to follow.
As one of the fastest and lowest-cost blockchains out there, supporting a plethora of decentralized finance (DeFi) applications, Solana's blockchain has become synonymous with utility generation. That's a good thing, and it's a central part of this network's investment thesis I think investors need to pay attention to.
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That said, today's price action among risk assets in both the equity and crypto markets is growing increasingly bearish. For Solana investors specifically, this sell-off has translated into a 24-hour move lower of around 2.1% as of 2:15 p.m. ET, with this decline actually breaching the 3% level in earlier trading.
I'd argue there are more bullish than bearish catalysts for Solana right now. But let's dive into what investors are paying attention to and why I think this recent dip is one that may be worth buying.
Despite strong catalysts, market forces are taking over for Solana investors
Source: Getty Images.
This week brought a flurry of good news to investors in the world's sixth-largest cryptocurrency.
Most notably, Solana saw its first-ever spot exchange-traded fund (ETF) listed by Bitwise, with some of the strongest inflows out of the gate since other influential launches of initial spot ETFs for other major tokens.
That said, concerns around the Federal Reserve wrapping up its interest rate cycle earlier than expected have led to a surge in bond yields (lower bond prices), lower equity valuations, and even more immense pressure on cryptocurrency valuations in recent days.
I'd expect to see this sort of uncertainty continue to play out in the form of higher volatility for a project like Solana. That's mostly because Solana's ability to grow is contingent on investors (and users) flocking to Solana as a go-to investment. If the perceived risk in this space rises high enough, another 2022-like decline could be in store, though I still think it's too early to tell if this is the case or not.
In my view, this drop in Solana from around $250 per token at this year's high to today's level of around $140 is one that looks juicy enough to step into. That is, for those investors out there who are willing to hold through what may be some serious volatility.
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Chris MacDonald has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.
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