Solana‘s price witnessed a sharp downturn today, plummeting by 9.25% to hit its lowest point in two weeks at $168.
This decline aligns with a broader negative trend in the cryptocurrency market, which experienced an overall decrease of 3.8% on April 5.
Among the key reasons contributing to SOL’s price drop is skepticism surrounding the Federal Reserve’s potential interest rate adjustments and reports highlighting transaction failures on the Solana blockchain.
Recent data from Dune Analytics revealed a notable surge in memecoin transaction failures on the Solana network, with over 75% of non-vote transactions failing on April 4, marking the highest failure rate observed.
However, Mert Mumtaz, CEO of Helius, disputed this narrative, attributing the majority of failed transactions to “bot spam.”
Despite the contested nature of the transaction failure data, the rumors alone have impacted SOL’s performance, causing it to underperform compared to the broader crypto market on April 5.
Furthermore, SOL’s price decline today is in tandem with significant corrections seen in its top memecoins, such as Bonk (BONK) and Dogwifhat (WIF), which dropped approximately 13.2% and 9% respectively in the last 24 hours.
Notably, the newly-launched memecoin Cat in a Dogs World (MEW) experienced a drastic 30% crash during the same period.
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Solana’s correlation with its memecoin projects has strengthened recently, with its daily correlation coefficient with BONK reaching 0.83 and with WIF at 0.53 on April 5, indicating their considerable influence on SOL’s market dynamics.
Additionally, U.S. Treasury futures data as of April 5 suggested that the Federal Reserve might delay interest rate cuts until September, with traders anticipating a more conservative rate cut of about 67 basis points for 2024.
This shift in expectations follows improved U.S. labor market data, with the unemployment rate decreasing to 3.8% in March.
From a technical analysis standpoint, Solana’s price decline today fits within its prevailing ascending triangle pattern, typically considered bullish.
This pattern suggests a potential bounce back for SOL towards $200 by the end of April, with a breakout potentially propelling its price to $240.
However, a drop below the triangle’s lower trendline could invalidate this setup, leading SOL towards its 50-day exponential moving average near $160 by April’s end.
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