3 Reasons Why the Solana (SOL) Price Crashed by 20% Weekly

TL;DR

• Solana (SOL) fell below $140 amid a broad crypto correction, whale sell-offs, and other setbacks.

• Despite the drop, the asset’s oversold RSI (15.9) and market optimism signal a possible rebound and buying opportunity.

The Potential Factors

Solana (SOL) was at the forefront of gains at the start of the year, with its price soaring to a new all-time high of over $285 on January 19. This happened one day before Donald Trump’s inauguration as America’s 47th President, which supposedly triggered huge excitement across the entire crypto space. 

Since then, though, the asset has been experiencing a downfall. The price has tumbled by 19.5% in the last week, currently trading at roughly $137. Its market capitalization has collapsed to approximately $67 billion, making SOL the sixth-biggest cryptocurrency. 

Perhaps the most evident reason contributing to the pullback is the severe correction of the crypto sector. As CryptoPotato reported, the past 24 hours have not been kind to Bitcoin (BTC), whose price slipped below $87,000. The altcoins suffered even more substantial losses, while the total value of liquidated positions for that timeframe equaled more than $1.5 billion.

Another factor that may have negatively affected SOL’s performance could be the potential selling pressure triggered by Wintermute. Several X users noted that the proprietary trading firm has withdrawn large amounts of Solana from Binance lately. 

The effort comes a few days before a massive token unlock, which is set to release over 11.2 million SOL into circulation on March 1. The increased supply could result in a further price slump, assuming demand doesn’t keep pace. 

Last but not least, we will focus on the whales’ activity. According to X user Ali Martinez, 135 large investors (holding more than 10,000 SOL) have sold or redistributed their holdings in the last month.

As mentioned above, a sudden influx of tokens for sale can overwhelm available demand. Additionally, the whales’ actions could be perceived as bad news from smaller players who may also decide to cash out. 

The Bright Side

Despite the significant correction, many market observers remain optimistic that SOL has the potential to return to the green track soon. The X user Lucky told his over two million followers on X that “there’s no need to panic.” 

They believe the asset could rise “much higher” in the near future, viewing the current price condition as “a fantastic deal.” 

Meanwhile, SOL’s Relative Strength Index (RSI) plummeted to a multi-year low of 15.9, which suggests that the token might be oversold and due for a rebound. Conversely, readings above 70 indicate that SOL has entered into overbought territory and could be headed for correction.