Solana (SOL) tumbled on June 16 amid a broader retreat across the top cryptocurrencies, led by the Federal Reserve's 0.75% interest rate hike a day before.
Notably, SOL/USD plunged nearly 17% to $30 a token, wiping out almost all the gains from the day before. The SOL price volatility liquidated almost $10 million worth of contracts in the past 24 hours across multiple crypto exchanges, data from Coinglass shows.
The latest declines come as an extension to SOL's broader correction, where it dropped by more than 90% after peaking out near $267 in November 2021. SOL also fell to its lowest level since July 2021 near $25.
In addition, a higher interest rate environment and the collapse of high-profile crypto projects like Terra have strengthened SOL's downside prospects.
Solana's pullback move on June 16 began after testing a horizontal trendline resistance near $34 that constitutes what appears to be an "ascending triangle" pattern.
Ascending triangles are continuation patterns, i.e., they tend to send the price in the direction of their previous trend. As a rule, breaking out of a triangle pattern in a bearish market, for example, sends the price down by as much as the structure's maximum height.
If SOL breaks below its ascending triangle's lower trendline then the bearish profit target will come below $22.50, as shown in the chart below.
Solana's downside target is about 25% below June 16's price and could be achieved by the end of June. Nonetheless, if SOL bounces after testing the triangle's lower trendline as support, it would eye the $34–$36 range as its interim upside target.
Over 27 million Solana tokens have exited its smart contract ecosystem since June 13.
The total value locked (TVL) inside Solana smart contracts dropped to 74.65 million SOL (~$2.25 billion) on June 16, down 27% in the last three days, according to data tracked by DeFi Llama. That amounts to nearly $840 million of withdrawals from the ninth-largest blockchain ecosystem by market cap.
Solend, a lending platform functioning atop the Solana ledger, witnessed a 26.5% decline in its TVL in the last three days and was holding 9.66 million SOL (~$290 million) as of June 16. Nevertheless, it remains the leading platform by TVL within the Solana ecosystem.
Related: Liquidity provider asks platforms to freeze 3AC funds to recover assets after litigation
The outflows indicate that depositors do not want to keep their SOL locked in DeFi protocols, a sentiment common across the sector after Terra, an "algorithmic stablecoin" project, collapsed last month.
Contagion, another yield ponzi going down.
— Pentoshi Powell Jr (@Pentosh1) June 16, 2022
Seriously get your coins off anything like Celsius and BlockFi before they aren't your coins anymore.
LFG, 3AC, Celcius etc all spread risk to each other and you pay the price for it https://t.co/cemFCvAeAz
Therefore, Solana's path of least resistance remains skewed to the downside in the near term, particularly with no improvement in terms of macro and fundamentals.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Analysts foresee a potential correction in Solana's price, with varied predictions on specific levels. The current market status reflects a recent decline, emphasizing the need for investors to monitor key support levels.
BerniceCrypto prices took a hike recently but while some are optimistic that the crypto bulls are returning, others feel that it is just a bull trap in a bull market. What is your perspective on this?
CatherineBinance, BitMex, and ByBit suspended the deposits of USDC and USDT on the Solana network.
BeincryptoThe SOL price has dumped to its lowest point since March 2021.
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