Is Solana at best price yet?

The SOL price still faces difficulties from the correlation with Bitcoin, macro risks as well as downtime.

Solana’s price (SOL) fell on June 3, dragging its net paper loss down to 85% in seven months after reaching over $260.

SOL prices fell more than 6.5% during the day to $35.68 after not being able to recover from the 10-month low.

Currently above a historically important support level, the SOL/USD pair could see a regression in June towards the next USD 40 – 45 sector, up about 25% from today’s price.

Will the SOL price drop by 60%?

However, a much longer recovery scenario is warranted and Solana faces difficulties when trading in correlation with Bitcoin (BTC), the leading cryptocurrency (according to market capitalization) that often influences trends on top altcoins.

Notably, the weekly correlation coefficient between BTC and SOL was 0.92 as of June 4.

Moreover, Solana is likely to suffer even greater losses than BTC if Bitcoin falls further below the current psychological support level of $30,000.

Meanwhile, the Fed looks determined to raise benchmark interest rates and lower its balance sheet. As a result of this hawkish policy, riskier assets such as Bitcoin have room to fall, damaging Solana’s bullish outlook.

Breaking SOL’s current support level – around $35 – increases the chance of a decline in the range of $18-25, serving as strong support in March to July 2021 and ahead of the 1.200% price increase.

Solana Network Decommissioned

The bearish outlook for SOL also surfaced as the Solana blockchain faced repeated shutdowns, thus rendering its network practically unusable for its main “dapps,” including the Solend lending protocol and the Serum decentralized exchange, for hours.

Solana’s latest software issue appeared on June 1, causing the network to shut down for 4.5 hours. The biggest blockchain shutdown occurred in January and has stopped for nearly 18 hours.

Decommissioning risks Solana’s competitive protocols benefiting some traders may transfer their capital elsewhere.

An independent market analyst believes crypto investors have become cautious after witnessing Terra’s recent failure. However, the analyst insists that Solana’s downtime will diminish over time as the network matures.

“But if they don’t prevent such events, other Layer 1s will continue to eat up its market share,” he noted.

DISCLAIMER: The Information on this website is a general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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