Over the past three days, Solana (SOL) has experienced a sharp downturn, along with the rest of the market. The altcoin has incurred a 12% loss in the weekly chart.
This decline was fueled by a series of positive economic data from the United States, raising concerns about a potential inflation rebound. This scenario could delay the Federal Reserve’s plans to ease monetary policy.
The Department of Labor reported an unexpected increase in job openings in November, while another report showed growth in the service sector activity in December. The data indicated robust economic growth that pushed the yields of ten-year Treasuries to 4.699%, the highest value since April 26.
Following the reports, Bitcoin dropped below $97,000, Ethereum slipped below $3,400, and Solana fell below $200.
Furthermore, a crucial date approaches for SOL: the deadline for approval requests for Spot Exchange-Traded Funds (ETFs) on Solana, submitted to the United States Securities and Exchange Commission (SEC). On January 23, the SEC will decide whether to approve or reject the application submitted by Grayscale.
According to Nicolai Søndergaard, an analyst at the research firm Nansen, a Solana Spot ETF will debut on the market this year, the only question is when.
“The real question is the number of iterations needed before the proposal is approved, as was the case with Bitcoin and Ethereum. However, I am convinced that by 2025, there will definitely be an ETF on Solana,” he stated during a 2024 event organized by Cointelegraph.
According to bets on the Polymarket platform, the chances of a Solana spot ETF being approved in 2025 are 74%.
Solana: The critical support level to watch is the $175 threshold
Analysts believe that traders are still operating in a “profit-taking” mode ahead of Donald Trump’s inaugural speech.
After the election of the pro-crypto candidate, the crypto market experienced a surge. The market capitalization exceeded $3 trillion, with Bitcoin (BTC) breaking the $100,000 psychological level for the first time.
Solana reached a new all-time high of $264, fueled by the belief that the Trump administration could usher in an era of favorable regulatory policies for the crypto sector and stimulate greater adoption of assets by traditional and institutional investors.
The narrative is still in play, which is why some analysts see this downturn as an opportunity.
Meanwhile, if a Solana Spot ETF were to be approved, billions of dollars from retail and institutional investors could flow into the new fund and help boost the altcoin.
For now, Solana’s recent movement has partially nullified the bullish breakout of a flag pattern that developed over the last month and a half. The recent three-day decline has brought the altcoin back into the consolidation zone, weakening the bullish momentum.
Currently, the key resistance to overcome in the coming days is set at $225, a crucial level if buyers were to regain control of the market.
On the other hand, if selling pressure persists, the main support is at $175. A break below this level could lead to a strong retracement, bringing the asset back below post-election levels.
Such a decisive reversal of the bullish trend seems unlikely, as the macroeconomic factors that propelled SOL to new all-time highs continue to support solid growth in the medium to long term.
Solaxy (SOLX): The first layer 2 on Solana’s blockchain
Meanwhile, investors are not only focusing on Solana but also on a new project: Solaxy (SOLX). It is the first layer 2 on Solana’s blockchain.
Its presale exceeded all expectations, raising over $9 million.
Solaxy is not just a new project in the crypto landscape but aims to solve one of Solana’s main issues: the congestion of its blockchain. By utilizing Layer 2 technology, Solaxy is able to enhance Solana’s performance without compromising its integrity.
Transactions are processed through Solaxy’s network, while maintaining full compatibility with Solana, allowing the system to operate smoothly even during peak activity periods.
Furthermore, Solaxy is a multi-chain solution that aims to integrate and leverage the best features of both Solana and Ethereum.
The $SOLX token is also available in the “Upcoming Tokens” feature of the new Web3 crypto wallet, Best Wallet.
