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Solana price extended the downward trend, reaching its lowest level since August 19 this year. It has slumped by nearly 34% from the year-to-date high. Worse, SOL is about to form a death cross pattern as the ETF and staking outflows rise, a sign that investors expect it to drop further in the near term.
Solana Price is About to Form a Death Cross Pattern
SOL price has been in a steep sell-off in the past two months, mirroring the subdued action in the broader crypto industry. Other top coins, including bigger names like Bitcoin, Ethereum, and XRP have been in a downtrend, a sign that the crypto winter has returned.
The sell-off has also coincided with the weakness in the stock market, where top indices like the Dow Jones and the Nasdaq 100 have all dropped in the past few months.
Solana has slumped because of the ongoing fear in the market. Data shows that the Crypto Fear and Greed Index has slumped to the fear zone of 25. In most cases, cryptocurrencies tend to underperform the market whenever there is fear in the market.
A look at the daily chart shows that the SOL token has been in a strong sell-off in the past few months and is now about to form a death cross pattern. This pattern happens when the 50-day moving average moves below the 200-day moving average. In most cases, this is usually one of the riskiest patterns in technical analysis.
Most importantly, the token has dropped below the 61.8% Fibonacci Retracement level of $84.7. In most cases, assets often drop further whenever they drop below that retracement level.
At the same time, the Average Directional Index (ADX) has continued rising and is currently at 38.26, its highest level since October 9. In most cases, an ADX figure of 20 and above is usually a sign that a trend is accelerating.
Therefore, the path of the least resistance for the token is downwards, with the next key target to watch being at $73, the 78.6% retracement level. If this happens, it will be a 10% drop from the current level.
Spot Solana ETF Outflows are Rising
Solana’s fundamentals have deteriorated in the past few months. One of the key aspects is that the spot SOL ETF outflows have continued rising. SoSoValue data shows that spot Solana ETFs shed over $32.10 million in assets this month, after losing an additional $143 million last month.
These funds have had cumulative net inflows of $1.44 billion and now hold $1.21 billion in assets under management (AUM), The biggest ones are funds by companies like Bitwise, Fidelity, Grayscale, and Morgan Stanley.
Sustained ETF outflows is a sign that demand among institutional investors is waning. In most cases, this view leads to more selling pressure since the investors usually have a long-term view.
The same trend is happening in staking. Data shows that Solana’s staking market capitalization has dropped by 13.50% in the last few days to $35 billion. The staking ratio has fallen from 70% a few months ago to the current 68%. One of the reasons for this is that Alameda and FTX addresses have unstaked 204,000 SOL tokens, a sign that they plan to sell.
Solana’s demand has also dropped in the spot and futures markets. The volume of all Solana tokens in the spot market dropped by 30% in the last 24 hours to $2.13 billion. Also, the futures open interest has been falling, a sign that demand remains weak.
