Solana (SOL) tumbled on June 16 amid a broader retreat across the top cryptocurrencies, led by the Federal Reserve’s 0.75% interest rate hike a day before.
Solana price rebound fizzles
Notably, SOL/USD plunged nearly 17% to $30 a token, wiping almost all the gains from the day before. The SOL price volatility liquidated almost $10 million worth of contracts in the past 24 hours across multiple crypto exchanges, data from Coinglass shows.
In addition, a higher interest rate environment and the collapse of high-profile crypto projects like Terra have strengthened SOL’s downside prospects.
SOL paints “ascending triangle”
Solana’s pullback move on June 16 began after testing a horizontal trendline resistance near $34 that constitutes what appears to be an “ascending triangle” pattern.
Ascending triangles are continuation patterns, i.e., they tend to send the price in the direction of their previous trend. As a rule, breaking out of a triangle pattern in a bearish market, for example, sends the price down by as much as the structure’s maximum height.
If SOL breaks below its ascending triangle’s lower trendline then the bearish profit target will come below $22.50, as shown in the chart below.
Massive SOL exit
Over 27 million Solana tokens have exited its smart contract ecosystem since June 13.
The total value locked (TVL) inside Solana smart contracts dropped to 74.65 million SOL (~$2.25 billion) on June 16, down 27% in the last three days, according to data tracked by DeFi Llama. That amounts to nearly $840 million of withdrawals from the ninth-largest blockchain ecosystem by market cap.
Related: Liquidity provider asks platforms to freeze 3AC funds to recover assets after litigation
The outflows indicate that depositors do not want to keep their SOL locked in DeFi protocols, a sentiment common across the sector after Terra, an “algorithmic stablecoin” project, collapsed last month.
Contagion, another yield ponzi going down.
Seriously get your coins off anything like Celsius and BlockFi before they aren’t your coins anymore.
LFG, 3AC, Celcius etc all spread risk to each other and you pay the price for it https://t.co/cemFCvAeAz
— Pentoshi Powell Jr (@Pentosh1) June 16, 2022
Therefore, Solana’s path of least resistance remains skewed to the downside in the near term, particularly with no improvement in terms of macro and fundamentals.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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