Key Insights:
- Solana’s price has dropped 21% this month due to shrinking stablecoin supply and broader market weakness.
- The delay in the U.S. CPI report adds uncertainty, with investors awaiting inflation data to shape market sentiment.
- Solana’s technical indicators suggest ongoing bearish pressure, with the price nearing key support levels.
Solana (SOL) has dropped 5% from its weekly value and 21% from its highest point earlier this month. The price drop comes amid a broader market downturn, with Solana particularly affected by the shrinking supply of stablecoins on its network. Over the past seven days, the total supply of stablecoins on the Solana blockchain has decreased by 5.5%, falling to $15.01 billion. Since stablecoins are critical for liquidity and trading volume on-chain, this reduction points to weakened investor demand and capital outflows, further pressuring the price of SOL.
Solana’s price struggles are also reflective of a broader market sentiment shift. Investors are turning away from riskier assets, such as cryptocurrencies, due to mounting global macroeconomic concerns. Notably, tensions between the U.S. and China over tariffs have intensified, adding to the economic uncertainty. Additionally, the ongoing U.S. government shutdown has delayed key economic data releases, including the U.S. Consumer Price Index (CPI) report, which is set for release on October 24. This report is expected to provide crucial insights into inflation trends and could influence the Federal Reserve’s next steps, impacting investor decisions.
Technical Indicators Signal Bearish Momentum for Solana
The technical outlook for Solana remains largely bearish, as the cryptocurrency’s price action reflects ongoing market weakness. The 20-day simple moving average (SMA) has recently crossed below the 50-day SMA, a bearish signal in technical analysis that suggests declining momentum. Solana is also trading below the critical 200-day exponential moving average (EMA), further indicating a lack of upward momentum. The Supertrend indicator has flashed red, and the MACD lines are pointing downward, signaling continued selling pressure in the short term.
At the time of writing, Solana’s price is approaching a crucial support level near $175.82. This level has previously been a point of defense for bulls, but a breakdown below it could open the door for a significant correction. If this happens, SOL might test lower demand zones around $165 or even $150, depending on the strength of the bearish momentum. However, if Solana manages to rebound and break above the $200 mark, it could trigger a trend reversal and offer the potential for a recovery in the near term.
