Solana (SOL) fell on June 16 amid a broader pullback from major cryptocurrencies, led by the Federal Reserve’s 0.75% interest rate hike a day earlier.
Solana Price Bounce Fades
In particular, SOL/USD fell almost 17% to $30 per token, erasing almost all of the gains from the previous day. SOL price volatility liquidated nearly $10 million worth of contracts in the past 24 hours across multiple cryptocurrency exchanges, data from Coinglass shows.
SOL settlement record since May 17. Source: Coinglass
The latest declines come as an extension of the broader SOL correction, where it fell more than 90% after peaking near $267 in November 2021. SOL also fell to its lowest level since July 2021, near of $25.
Additionally, a higher interest rate environment and the collapse of high-profile crypto projects like Terra have strengthened SOL’s downside outlook.
SOL paints “ascending triangle”
The Solana retracement move on June 16 began after testing horizontal trendline resistance near $34 which constitutes what appears to be a “ascending triangle pattern.
Ascending triangles are continuation patterns, meaning they tend to send price in the direction of its previous trend. As a general rule of thumb, breaking out of a triangle pattern in a bear market, for example, drives the price down as much as the maximum height of the structure.
If SOL breaks below the lower trend line of its ascending triangle, the bearish profit target will be below $22.50 as shown on the chart below.
SOL/USD four-hour price chart with “ascending triangle” pattern. Source: TradingView
Solana’s downside target is about 25% below the June 16 price and could be reached by the end of June. However, if SOL bounces back after testing the lower trend line of the triangle as support, I would consider the $34-$36 range as its interim upside target.
Massive SOL output
More than 27 million Solana tokens have come out of its smart contract ecosystem since June 13.
The total value locked (TVL) within Solana smart contracts dropped to 74.65 million SOL (~$2.25 billion) on June 16, down 27% over the past three days, according to data tracked by DeFi calls. That equates to almost $840 million of withdrawals from the ninth-largest blockchain ecosystem by market capitalization.
Solana TVL performance since April 2021. Source: DeFi Llama
Solend, a lending platform that runs on top of Solana’s ledger, witnessed a 26.5% decrease in its TVL in the last three days and had 9.66M SOL (~$290M) as of June 16 . However, it remains the leading TVL platform within the Solana ecosystem.
Related: Liquidity provider asks platforms to freeze 3AC funds to recover assets after litigation
The outputs indicate that depositors do not want to keep their SOL locked in DeFi protocols, a common sentiment across the sector after Terra, an “algorithmic stablecoin” project, collapsed last month.
Contagion, another falling performance ponzi.
Seriously, get your coins out of anything like Celsius and BlockFi before they’re not your coins anymore.
LFG, 3AC, Celcius etc all share the risk with each other and you pay the price https://t.co/cemFCvAeAz
—Pentoshi Powell Jr (@Pentosh1) June 16, 2022
Therefore, Solana’s path of least resistance remains biased to the downside in the short term, particularly without improvements in macro and fundamental terms.
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 do your own research when making a decision.
This post SOL Price Trends Towards Yearly Low As Solana TVL Drops $870M In Three Days
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