Quick Summary
The price of Solana fell by 1% over 24 hours due to uncertainty regarding the approval of Exchange-Traded Funds (ETFs), long-term coin holders selling, and the weak performance of alternative cryptocurrencies in general.
Uncertainty Regarding ETFs: The SEC's decision on Solana funds involving staking tokens is under scrutiny.
Coin Holder Activity: Long-term coin holders sold SOL, increasing supply pressure in the market.
Impact of Alternative Currencies: The overall market shift towards Bitcoin has reduced the demand for SOL.
Detailed Analysis
1. Main Catalyst: Delay in Approval of Exchange-Traded Funds (ETFs)
On July 31, Bitwise and VanEck submitted a proposal to include Liquid Staking Tokens (LSTs) in Solana ETFs (Bitwise), but the proposal faced skepticism. Although staking tokens like JitoSOL could enhance returns, the SEC's history of rejecting similar structures for Ethereum ETFs raised concerns. Traders likely considered regulatory risks, leading to profit-taking after SOL's 19.5% increase over 30 days.
2. Supporting Factors: Dynamics of Coin Holders
On-chain data shows an increase in the "continuity" (Livability) index since July 19 (CoinMarketCap), indicating a rise in selling by investors who held SOL for over a year. This added selling pressure of about $50 million, coinciding with the price of SOL dropping below $175.
Conclusion
The decline in SOL's price reflects a state of regulatory concern and profit-taking, but technical indicators such as the 50-day exponential moving average at $173.33 and the potential approval of Exchange-Traded Funds (ETFs) keep medium-term prospects promising. Will the stance of the U.S. Securities and Exchange Commission (SEC) on staking tokens determine the next major move for Solana?