Solana (SOL) experienced a significant decline of almost 6% over the past 24 hours, dropping to $98. This decline comes as the previous weeks’ frenzy surrounding the Solana ecosystem and the rally of Solana-based meme coins showed signs of losing momentum. Data indicates that SOL has pulled back over 20% from its highest price since April 2022, which was $125 on Monday.
However, there is some relief for SOL holders as the token managed to recover slightly and was trading above $100 at the time of writing. The pullback in SOL’s price led to the liquidation of approximately $32 million worth of leveraged long positions. Trading platforms were forced to close these trades due to insufficient margin, which further accelerated the pullback, according to CoinGlass data.
The decline in SOL’s price also affected Solana-based meme tokens such as BONK and WIF. These tokens, which experienced significant surges earlier this month, have now dropped over 50% from their all-time highs recorded in December. This suggests that investors are taking profits and losing interest in participating in the frenzy surrounding these tokens.
Interestingly, while SOL experienced a pullback, the native token of the BNB Smart Chain, BNB, rallied 9% in the past 24 hours. As a result, BNB reclaimed the fourth spot in the cryptocurrency ranking by market capitalization, surpassing Solana.
Solana has been one of the best-performing crypto assets of 2023, with a staggering rally of 900% from around $10 in early January. This impressive performance has revitalized Solana’s ecosystem after it endured significant losses during the bear market.
However, according to David Shuttleworth, a research partner at Anagram, Solana’s recent pullback was expected. Shuttleworth explained that the rally had shown signs of overheating, as evidenced by elevated fund rates for derivatives positions. Traders were increasingly moving their capital out of SOL and into stablecoins, either to secure profits or reduce their exposure to the token.
Shuttleworth also noted that there was a quick rebalancing against long positions, many of which were caught off guard and overleveraged. This likely contributed to the downward pressure on SOL’s price.
In conclusion, Solana’s SOL token experienced a notable decline of almost 6% in the past 24 hours, reaching $98. This pullback comes after weeks of frenzied activity in the Solana ecosystem and the rally of Solana-based meme coins. The decline in SOL’s price led to the liquidation of leveraged long positions, and Solana-based meme tokens also suffered significant losses. Meanwhile, BNB rallied and surpassed SOL in the cryptocurrency ranking. The pullback in SOL’s price was expected due to signs of overheating in the rally, leading traders to move their capital into stablecoins.