SOL attracted attention with its price movements: Will it rise?

solana‘s native token SOL tested the $145 support level on June 11, hitting its lowest level in the last four weeks.

SOL underperformed the overall cryptocurrency market, which experienced a sharp sell-off of 15.8 percent in four days and a decline of 10 percent in the same period. However, it may have created a buying opportunity for SOL based on two key factors.

Effect of macroeconomic events on SOL price

Investors are worried that the US Federal Reserve (Fed) may postpone interest rate cuts after turbulent economic signals. According to CME FedWatch, investors have a 48 percent chance that interest rates will remain the same through September, a significant increase compared to 39 percent a month ago. After the S&P 500 index reached a record high on June 7, investors calmed down while waiting for Fed Chairman Jerome Powell’s statements on June 12.

According to Yahoo Finance, Citigroup’s head of US equity trading strategy, Stuart Kaiser, said that an increase of more than 0.4 percent in the Consumer Price Index (CPI) compared to the previous month could increase sales and potentially push the S&P 500 higher. He thinks it could drop by 1.5 to 2.5 percent. Kaiser also warned that the S&P 500 may experience its biggest single-day movement since March 2023. US inflation information, which will be announced on June 12 before the Fed’s interest rate decision, is being followed with curiosity.

SOL investors are hopeful for a potential US exchange-traded fund (ETF) listing despite the regulator not supporting cryptocurrencies other than Bitcoin and Ether. Brian Kelly, founder and CEO of BKCM Digital Asset Fund, sees SOL as a strong candidate for an ETF, especially after Bitwise’s chief investment officer Matt Hougan discussed how real-world applications of Solana could attract institutional investments.

SOL’s recent poor performance can be paired with network problems. It was revealed that validators on the Solana network were targeting traders through sandwich attacks. Malicious validators manipulated process prices for the loss of individual investors. Thereupon, the Solana Foundation removed these validators from the delegation program, reducing the incentives for such harmful actions.

Although the popular altcoin suffered a steep 15 percent drop in just four days, various indicators show that investors’ faith in SOL remains intact. This sentiment may soon lead to a positive turn once macroeconomic conditions stabilize.

What do onchain and derivative data show for Solana?

Demand for leverage through SOL futures was unaffected by worsening market conditions. Always contracts, also known as outlier swaps, have an embedded ratio that, when positive, indicates increased demand for leverage amid long positions.

Data shows that SOL’s funding rate has been pegged at 0.01 percent over eight hours since June 8, which equates to about 0.2 percent per week. This stability in demand between bullish and bearish positions, following the 15 percent price drop in SOL, demonstrates the resilience of the market. If the bulls had relied heavily on leverage, a significant increase in the funding rate could have been seen.

Data from the Solana network shows an increase in the number of users and process volume. While some analysts believe that Solana’s low prices may encourage information manipulation, this problem is not unique to Solana. The problem also affected other platforms such as Ethereum’s layer-2 solutions and competitors such as BNB Chain.

Solana is currently the largest blockchain interacting with decentralized applications (DApps), operating on platforms such as Jupiter Exchange and Raydium. However, the network’s $119 million daily trading volume is significantly lower than Polygon’s $292 million and Arbitrum’s $1 billion trading volume.