- Solana’s price dropped to a 7-day low of $162 as investors un-staked $580 million worth of SOL following the approval of the Ethereum ETF by the US SEC.
- This significant un-staking activity and Ethereum’s rising market dominance have led to increased bearish sentiment and volatility for Solana.
Market Reaction to Ethereum ETF Approval Triggers Solana Price Decline
Solana’s price has faced significant pressure, dropping to a 7-day low of $162 on Friday, May 24, as the crypto market responds to the recent approval of the Ethereum ETF by the US Securities and Exchange Commission (SEC). This regulatory milestone has spurred notable shifts in the cryptocurrency landscape, impacting various altcoins, including Solana.
On-chain data reveals that Solana Proof-of-Stake (PoS) validators have un-staked a substantial 3.5 million SOL between May 20 and May 24. This large-scale withdrawal translates to approximately $580 million at current market prices, indicating growing investor concern over Solana’s short-term prospects.
The longstanding rivalry between Solana and the Ethereum network has been brought to the forefront once again. The approval of the spot Ethereum ETF has led to heightened volatility in Solana’s price. As Ethereum gains market dominance, Solana’s immediate price outlook appears increasingly uncertain.
At the time of writing, Solana’s price hovers just above $166, marking a sharp 14.31% decline from its weekly peak of $188 recorded on May 21. In contrast, Ethereum has surged by 25% during the same period, maintaining a robust position above the $3,700 milestone.
Un-staking Frenzy: Investors Withdraw SOL Worth Over $580 Million
The massive un-staking activity suggests that Solana’s core investors and node validators are wary of the potential negative impacts on SOL’s price following the Ethereum ETF approval. According to StakingRewards data, the total number of SOL coins deposited in Solana’s staking contract has dropped from 368.8 million on May 20 to 365.3 million by May 24.
Such significant withdrawals often lead to an increase in short-term market supply, which can negatively affect prices. Moreover, the timing of these withdrawals indicates that some investors may be looking to exit early to avoid potential bearish trends or to diversify into other altcoins on the Ethereum network, hoping to benefit from the anticipated influx of funds into ETH ETFs.
The impact of these withdrawals is already evident. Solana’s price briefly rebounded to $165 after hitting a low of $162, but the substantial outflow of $580 million worth of SOL could hinder its chances of reaching new highs above $200.
Bearish sentiment is also prevalent in the derivatives market, where short traders have accumulated over $285 million in leveraged positions against Solana’s price rising above $183. This outweighs the $148 million in active long contracts, indicating a more challenging path ahead for Solana.
While the broader crypto sector experiences positive sentiment, Solana faces significant headwinds. The recent staking withdrawals and the competitive pressure from Ethereum’s ETF approval suggest that Solana’s price might continue to face volatility and downward pressure in the near term. Key resistance levels to watch include the $170 mark, where a strong sell-wall exists, and a potential retracement towards the $150 support level if bearish trends persist.
