Ethereum, Cardano, and Solana Are Dropping Today Despite Key Catalysts. Here's What to Know.

Today's price action in the cryptocurrency market is becoming a bit more choppy, with a larger divergence among top tokens than we've seen over the past week. Since the presidential reelection of Donald Trump, most cryptocurrencies have been on a tear, and that rally hasn't stopped today, with the overall market climbing more than 2%.

However, Ethereum (CRYPTO: ETH), Cardano (CRYPTO: ADA), and Solana (CRYPTO: SOL) have declined 2%, 6.4%, and 3.8%, respectively, over the past 24 hours as of 4 p.m. EST.

Now, it should be noted that these three top cryptos have seen strong buying activity over the past week. Ethereum, Cardano, and Solana have appreciated 34.5%, 70.3%, and 26.6% over this time frame, so there's likely some profit taking happening in today's session among these top tokens. That's at least part of the story.

Let's drive into what fundamental factors may be behind today's move and what catalysts investors should keep an eye on.

Why are these three top tokens down today?

Aside from some profit taking after almost a parabolic move higher, today's price action does appear to be tied to some key fundamental factors.

For one, liquidations data is pointing almost entirely in the same direction over the past 24 hours. Over this time frame, Ethereum has seen $93 million in long liquidations versus $46 million in short liquidations. For Cardano and Solana, those numbers are $6.9 million vs. $5.1 million, and $35 million vs. $22.9 million, indicating that investors are being pushed out of speculative bullish bets on these tokens continuing to rise.

The question is whether traders and speculators will reload positions at current levels, or wait for buying pressure to materialize again. On a total value locked (TVL) and volume basis (see below), data continues to come in strong for these three projects. Thus, for now, it appears this is mostly profit taking after quite a run over a seven-day period.

What should investors be watching

As mentioned, today's price action comes in the face of some rather broadly bullish momentum in the overall crypto sector. The reelection of former president Donald Trump to the White House should bring a much more favorable regulatory environment to this sector overall. And with greater regulatory clarity and a really good chance at a new Securities and Exchange Commission (SEC) chairman come a much greater likelihood the above-mentioned tokens will be considered assets in the minds of regulators, opening up a wave of opportunities for capital inflows such as spot exchange-traded fund (ETF) approvals and new trading vehicles.

On the political front, much of Cardano's impressive rise over the past week has to do with reports that Cardano founder Charles Hoskinson is working with the Trump administration to help shape future crypto policy put forward by the administration. Having an expert such as Hoskinson aiding the Trump team should provide a big boost to this specific token (and the market overall), so that's something to watch, particularly for those bullish on this layer-1 network.

Ethereum has seen surging interest not only tied to the political and regulatory landscape improving in the crypto sector, but due to key network-specific catalysts. Most notably, an "ETH 3.0 Proposal" has been put forward, which is aimed at improving the network's reliability and scalability. If this proposal goes forward as planned, investors can expect a series of changes that could make the network much more responsive to the needs of developers and users, and potentially render some layer-2 scalability projects obsolete. We'll see.

Finally, Solana has seen one of the largest post-election jumps among the major cryptocurrencies, but it's another token that's seen broadly positive fundamental data over the past week that's justified such a move. This past week, decentralized exchange volumes on the Solana network surged to there highest level since March. That move indicates that plenty of users and traders continue to view the Solana network as the preferred platform to engage on right now.

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Chris MacDonald has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.