The Solana price correction is just inches away from retesting the bottom trendline, which triggered a major rally in the past.
SOL, the native cryptocurrency of the Solana blockchain, plunged nearly 2.5% during Thursday’s U.S. market hours. The selling pressure followed a broader market correction as the S&P 500 has just wiped out $1.5 trillion in value. However, the Solana price faced additional pressure as user engagement declined and derivative data showed weakening interest from crypto traders.
The Solana price shows a sharp correction from $171.8 to the current trading value of $134.2 — 22.25% — within a fortnight. Consequently, the asset market cap plunged to $74.8 billion. The downtrend likely followed a broader market correction amid macroeconomic uncertainty in the U.S.
The Bureau of Labor Statistics surprisingly announced the non-farm payroll report for October will not be released, meaning the Federal Reserve will not have its regular monthly snapshot of the labor market to study prior to the December Federal Open Market Committee (FOMC) meeting. The next employment update is now set to be scheduled only after that gathering, which compels Chair Jerome Powell and his colleagues to set policy without the latest hiring and wage figures.
Market participants have quickly repriced the likelihood of a December rate cut lower, with many now anticipating either a pause or a smaller 25-basis-point move at most. Higher-for-longer interest rates make non-yielding things less appealing, setting off a general risk-off reaction that brings down Bitcoin and other cryptocurrencies.
Since the violent sell-off of October 10 that cleared out more than $800 million in leveraged positions, Solana futures open interest has failed to rebound in any meaningful way. According to the data provided by Coinglass, OI is still floating around $7.3 billion as of November 20. Daily price changes remain muted at 1-3% — funding rates approaching zero and long/short ratios only just above 1:1 — signaling low conviction
The stagnant $7.3 billion OI is a reflection of continuing caution after SOL took a nosedive from $230 to under $130 last month. With leverage ratios at multi-month lows and ETF inflows falling short, there is still fresh capital on the sidelines.
With an intraday loss of nearly 2.5%, the Solana price currently trades at $133.60. This pullback, backed by a substantial spike in trading volume, indicates strong conviction from sellers to drive a prolonged correction.
Currently, the coin price stands just 4% short of retesting a long-awaited support trendline at the $130 mark. Since October 2023, this dynamic support trendline has acted as a major zone for buyers to recover their bullish momentum.
The previous reversal from the support had triggered a massive recovery with the long-term uptrend in Solana price. Therefore, if the buyers continued to defend this floor, the coin price could trigger a bullish reversal
On the contrary, if the coin breaks below the bottom trendline, the sellers would strengthen their grip over this asset to drive a prolonged correction and chase the $100 mark.
