Solana (SOL) Price Drops as Network Concerns and Economic Data Impact Sentiment
Solana’s native token, SOL, experienced a noticeable drop in price today, with its value declining by approximately 3.85% to reach $142 on April 25. This correction follows a local high of around $160 a day earlier, marking an 11% fall from its recent peak.
Several factors have contributed to the downward trend in SOL’s price, including unresolved network issues and discouraging U.S. economic reports.
Network Outages Still a Problem for Solana
The Solana blockchain has faced persistent network outage issues, and despite reports suggesting these problems had been resolved, Solana developers admitted that this is not entirely accurate. Mert Mumtaz, CEO of the Solana-based development platform Helius, pointed out that the network’s congestion challenges continue, contradicting claims from other sources that transaction confirmation times had improved.
This revelation coincided with a significant drop in SOL’s price, falling by approximately 11% after the statement, indicating that the unresolved network issues continue to impact market sentiment. Solana’s history of network instability has previously led to substantial price corrections, including a notable 14% drop following a major network failure.
U.S. Economy Data Weighs on Risk Assets
The broader decline in risk assets, including cryptocurrencies like SOL, is partly driven by underwhelming U.S. economic data. The latest reports indicate a significant slowdown in the U.S. economy, with persistent inflation pressures further clouding the outlook.
- The U.S. gross domestic product (GDP) grew by 1.6% in the first quarter of 2024, missing expectations.
- Core inflation increased from 2% to 3.7% annually, making an interest rate cut less likely in the near term.
- The yield on the U.S. 10-year Treasury note rose to 4.73%, hitting a five-month peak, suggesting that higher yields might continue to dampen riskier assets like stocks and cryptocurrencies.
These economic factors, combined with the network issues, have contributed to the downturn in SOL’s price today.
Technical Breakdown: Rising Wedge Pattern
A technical analysis of SOL’s price movement reveals a breakdown from a rising wedge pattern. This pattern, marked by two converging ascending trendlines, often signals a bearish reversal when prices break below the lower trendline. This breakdown led to a significant drop in SOL’s price on April 24 and 25, with increased trading volumes adding to the downward pressure.
This article is for general information purposes only and should not be taken as legal or investment advice. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
