sol crypto news – Will SOL Bounce Back to $170? Two Strong Indicators Say ‘Buy’

sol crypto news – SOL Set to Rebound to $170? Here’s Why Two Indicators Are Flashing ‘Buy’

Sol Crypto News – Solana’s native token, SOL, recently dipped to a four-week low of $145 on June 11, marking a sharp 15.8% decline over four days. This drop outpaced the broader cryptocurrency market, which saw a 10% decline in total capitalization during the same period. Despite this downturn, some analysts believe that macroeconomic instability might present a buying opportunity for SOL, supported by two key indicators.

Macroeconomic Pressures and Their Impact on SOL

Market Reactions and Investor Sentiment

Investors are on edge, anticipating a possible correction in the stock market due to mixed economic signals. The uncertainty has led the United States Federal Reserve (Fed) to reconsider delaying interest rate cuts. According to the CME FedWatch tool, the likelihood of rates remaining unchanged until September has increased to 48% from 39% a month ago. The S&P 500 index, after hitting a record high on June 7, has stalled as investors await comments from Fed Chair Jerome Powell on June 12.

Stuart Kaiser, Citigroup’s head of U.S. equity trading strategy, warns that a Consumer Price Index (CPI) increase above 0.4% could trigger a significant market selloff, potentially causing the S&P 500 to drop by 1.5% to 2.5%. This scenario, reported by Yahoo Finance, could lead to the S&P 500’s largest single-day movement since March 2023. The upcoming U.S. inflation data release on June 12 is crucial, coming just before the Fed’s rate decision.

Hopes for a U.S. ETF Listing

SOL investors are optimistic about the possibility of a U.S. exchange-traded fund (ETF) listing, even though the regulatory body has only supported Bitcoin (BTC) and Ether (ETH) so far. Brian Kelly, CEO of BKCM Digital Asset Fund, considers SOL a strong ETF candidate, especially following Bitwise’s chief investment officer Matt Hougan’s discussions on Solana’s real-world applications attracting institutional investments.

Network Challenges and Responses

Issues with Maximum Extractable Value (MEV)

SOL’s recent underperformance can also be attributed to network issues, particularly with maximum extractable value (MEV). Validators on the Solana network were found exploiting traders through sandwich attacks, manipulating transaction prices for profit at the expense of retail investors. In response, the Solana Foundation removed these validators from its delegation program, reducing incentives for such harmful practices.

Despite a significant 15% drop in four days, investor confidence in SOL appears strong. This sentiment, combined with stabilizing macroeconomic conditions, could lead to a positive turnaround for SOL.

Indicators of a Potential Upside

Stability in Futures Markets

The demand for leverage through SOL futures has remained steady despite the market downturn. Perpetual contracts, also known as inverse swaps, have an embedded rate that, when positive, indicates increased demand for long (buy) positions. Conversely, a negative rate suggests higher demand for short (sell) positions. SOL’s funding rate has remained stable at 0.01% per eight hours since June 8, translating to about 0.2% per week. This stability indicates balanced demand between bullish and bearish positions, suggesting market resilience. A significant rise in the funding rate would indicate excessive leverage by bulls, which is not currently observed.

Strong On-Chain Activity

On-chain data from the Solana network shows an increase in user numbers and transaction volume. While some analysts argue that Solana’s low fees might encourage data manipulation, this issue is not unique to Solana and affects other platforms like Ethereum’s layer-2 solutions and BNB Chain. Solana ranks as the fourth largest blockchain by 24-hour active addresses interacting with decentralized applications (DApps), with notable activity on platforms like Jupiter Exchange and Raydium. However, Solana’s daily transaction volume of $119 million is significantly lower than Polygon’s $292 million and Arbitrum’s $1 billion.

Conclusion: Can SOL Reclaim $170?

Despite a sharp correction to $145 on June 11, both SOL derivatives and the Solana network have remained stable, indicating that traders and users are still engaged. The potential for SOL to reclaim $170 seems plausible, especially if the Solana Foundation’s efforts to address maximum extractable value (MEV) improve the overall user experience. With macroeconomic factors and robust on-chain activity as key indicators, SOL might be positioned for a rebound.

FAQ: Solana’s Native Token (SOL) and Its Market Performance

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