In the past three days, Solana ($SOL) has experienced a sharp decline alongside the broader market.
The altcoin has accumulated a 12% loss in the weekly chart.
This downturn has been fueled by a series of positive economic data from the United States, raising concerns about a potential rebound in inflation. Such a scenario could delay the Federal Reserve’s plans to ease monetary policy.
The Department of Labor reported an unexpected increase in job openings in November, while another report indicated growth in service sector activity in December. The data pointed to solid economic growth, pushing the yields on ten-year Treasury bonds to 4.699%, the highest since April 26.
After the releases, Bitcoin fell below the $97,000 mark, Ethereum slipped under $3,400, and Solana dropped below $200.
Additionally, SOL is approaching a crucial date: the deadline for approval requests for Spot Exchange-Traded Funds (ETFs) on Solana, submitted to the U.S. Securities and Exchange Commission (SEC). On January 23, the SEC will decide whether to approve or deny Grayscale’s application.
According to Nicolai Søndergaard, an analyst at research firm Nansen, a Spot ETF for Solana will debut in the market this year, with the only question being when.
“The real unknown concerns the number of iterations needed before the proposal is approved, as has happened for Bitcoin and Ethereum. However, I am convinced that by 2025, there will definitely be an ETF on Solana,” he stated during a 2024 event organized by Cointelegraph.
According to bets on the Polymarket platform, the odds of a Solana spot ETF being approved in 2025 are at 74%.
Critical Support Level for Solana: $175
Analysts believe that traders are still operating in a profit-taking mode in anticipation of Donald Trump’s inaugural speech.
Following the election of the pro-crypto candidate, the crypto market experienced a surge. The market capitalization surpassed $3 trillion, with Bitcoin ($BTC) breaking the psychological barrier of $100,000 for the first time.
Solana reached a new all-time high of $264, fueled by the belief that the Trump administration could usher in an era of favorable regulatory policies for the crypto sector and stimulate greater adoption of assets by retail and institutional investors.
The narrative remains in play, which is why some analysts believe this decline is an opportunity.
Meanwhile, should a Spot ETF on Solana be approved, billions of dollars from retail and institutional investors could flow into the new fund and contribute to driving the altcoin higher.
Currently, Solana’s recent movement has partially undone the bullish breakout of a flag pattern that developed over the past month and a half. The recent three-day decline has brought the altcoin back into the consolidation zone, thereby weakening the bullish momentum.
At present, the key resistance level to watch in the coming days sits at $225, a critical threshold if buyers are to regain control of the market.
If sell pressure persists, primary support lies at $175. A breakdown below this level could lead to a significant retracement, bringing the asset below the levels achieved after the election.
Such a decisive reversal of the bullish trend seems unlikely, as the macroeconomic factors that propelled $SOL to new all-time highs continue to support solid growth in the medium to long term.
Introducing Solaxy (SOLX): The First Layer 2 on the Solana Blockchain
Meanwhile, investors are not only focusing on Solana but also on a new project: Solaxy (SOLX). This is the first Layer 2 on the Solana blockchain.
Its presale has exceeded expectations, raising over $9 million.
Solaxy is not just another project in the crypto landscape; it aims to address one of Solana’s main issues: congestion on its blockchain. By utilizing Layer 2 technology, Solaxy enhances Solana’s performance without compromising its integrity.
Transactions are processed via the Solaxy network while maintaining full compatibility with Solana, enabling the system to operate smoothly even during periods of high activity.
Additionally, Solaxy is a multi-chain solution that seeks to integrate and leverage the best features of both Solana and Ethereum.
The $SOLX token is also available in the “Upcoming Tokens” feature of the new crypto Web3 wallet Best Wallet.
