The Latest Solana Price Movement
The price of Solana’s native cryptocurrency, SOL, experienced a drop of over 4% on April 17, falling below $24.50, despite reaching a two-month high of $26 earlier in the day. This decline in SOL’s price followed similar price movements in other top-ranking cryptocurrencies like Bitcoin (BTC) and Ether (ETH), which also experienced price drops of 3.5% and 3% respectively, indicating a potentially bearish start to the week.
SOL Price in Technical Correction
Analysts attribute SOL’s price drop to a technical correction as it entered its resistance range of $25-$27, which has historically capped SOL’s upside attempts since January 2023. This resistance range has been followed by 25%-40% corrections on multiple occasions this year. Furthermore, SOL’s daily relative strength index (RSI) is hovering around the overbought threshold of 70, increasing the possibility of a bearish reversal in April. In this scenario, the immediate downside target could be around $20, which is approximately 20% lower than the current prices. On the other hand, a decisive breakout above the $25-$27 range could propel SOL’s price towards $30, which served as support in August-October 2022. If the bullish momentum continues, SOL could potentially reach $35 in the coming months, coinciding with its 50-week exponential moving average.
Grayscale Solana Trust’s Public Debut
Grayscale Investments, a U.S.-based investment firm, announced on April 17 that its Grayscale Solana Trust had begun trading on OTC Markets with the symbol GSOL. The Grayscale Solana Trust is a security that derives its value from SOL’s spot price, providing investors with exposure to the Solana market without the challenges of buying, storing, and safekeeping SOL directly. However, interestingly, SOL’s price dropped by up to 4.4% after the announcement, indicating that traders may have “sold the news” of an institutional Solana investment product going public.
One reason for the potentially bearish debut of GSOL could be the current structure of Grayscale trusts as closed-end funds. This means that Grayscale cannot issue new shares or remove shares from the open market to adjust to capital inflow or outflow. As a result, the share price of the Solana trust may deviate from the net asset value, which could spook investors in a bear market when GSOL starts trading at a discount compared to the value of Grayscale’s SOL reserves, similar to the Grayscale Bitcoin Trust.
Conclusion
Despite the recent retail debut of Grayscale Solana Trust, SOL’s price has experienced a 4% drop, potentially due to technical correction and market dynamics related to Grayscale trusts. Traders and investors should closely monitor SOL’s price movements, particularly around the resistance range of $25-$27, as it could indicate potential bearish or bullish trends in the coming weeks. Additionally, understanding the structure and dynamics of investment products like Grayscale Solana Trust is crucial in evaluating their impact on SOL’s price and overall market sentiment.
