Solana’s native token, SOL (SOL), is down today, falling approximately 3.85% to reach $142 on April 25. The losses are part of a correction that started a day prior when SOL topped out at its local high of around $160. Its price has fallen by over 11% since.
Multiple factors have adversely affected SOL’s price performance today, including one of Solana developers’ admission that they have not resolved the blockchain’s network outage issues yet and an underwhelming U.S. economy report.
Additionally, a disappointing report on the U.S. economy further dampened investor sentiment, impacting SOL’s value.
Solana congestion issues stand unresolved
A key figure within the Solana developer community, Mert Mumtaz, CEO of the Solana-based development platform Helius, countered claims that the network’s congestion problems were fully resolved.
Responding to a post on X by data analytics firm SolanaFloor, which suggested that Solana’s issues were “completely resolved” due to reduced transaction confirmation times, Mumtaz clarified that the network’s operational challenges are still ongoing.
SOL established its local top when Mumtaz published the tweet. The cryptocurrency’s price dropped by circa 11% afterward, suggesting that Solana’s network status continues to play a core fundamental catalyst in the market.
Historically, Solana has experienced significant price corrections linked to its network stability issues, including a notable instance when prices dropped nearly 14% after a network failure.
U.S. economy data pressures risk-assets lower
Solana’s price was rattled like most crypto assets today due to a significant slowdown in the U.S. economy and persistent inflation pressures.
Related: Bitcoin price risks 1-week lows as US GDP sparks ‘stagflation’ woes
Notably, the world’s largest economy’s gross domestic product (GDP) advanced 1.6% in the first quarter of 2024, trailing expectations. However, the core inflation was stronger, rising from a 2% annualized rate to 3.7%, making a near-term interest rate cut even less likely.
Swap traders anticipate approximately 33 basis points of Federal Reserve rate cuts throughout 2024, a significant reduction from the more than six quarter-point cuts they had forecasted at the beginning of the year, according to CME.
Rising expectations of enduring high interest rates have driven the yield on the benchmark U.S. 10-year Treasury note to 4.73% as of April 24, marking a five-month peak.
Higher yields generally lessen the appeal of riskier assets like stocks and cryptocurrencies, contributing to the downward pressure on Solana’s price today.
Rising wedge breakdown
SOL’s price decline today is further part of a breakdown resulting from its prevailing rising wedge pattern.
On April 24, Solana’s (SOL) price dropped notably after breaking below its rising wedge pattern, characterized by two ascending, converging trendlines. This move coincided with an increase in trading volumes.
Typically, after a rising wedge pattern formation, prices can fall by an amount equivalent to the maximum height of the wedge, which contributed to the decline in SOL’s price on April 24 and 25.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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