Why Has the Price of Solana (SOL) Dropped Today?

SOL has maintained an excellent position with good markets for derivatives and on-chain indicators, even after an 11.3% fall in the span of two days.

Source: kriptokoin.com

The native token of Solana, SOL, had an astounding 58.6% increase in just a few days, peaking on November 11 at $64 dollars. But the two-day pullback of 11.3% to $54 that followed has traders wondering if this is a sign of waning optimism or just a short-term price correction. SOL's success may be contrasted to that of other well-known cryptocurrencies in order to put it in perspective. Avalanche's AVAX has increased by 17% from its top on November 11; Ether has gained 1%. The fact that SOL has underperformed in the larger altcoin market is shown by this comparison. 

When It Comes To On-Chain Engagement And Efficiency, Solana Is Still In The Lead

Although the cost of SOL has just dropped, a 35% rise over the last seven days indicates that investors shouldn't jump to a gloomy conclusion too soon, as this may just be a normal correction after Solana's impressive surpass. On-chain measurements and SOL's trading in derivatives are two foundations of the Solana network that should not be disregarded. Overuse of leveraging by traders may result in enforced liquidations, particularly in inverse swaps or perpetual agreements where funding rates are critical.

Perpetual deals, sometimes known as inverse swaps, feature an embedded rate that usually gets paid each eight-hour period. A positive financing rate means that purchasers, or longs, are looking for greater leverage. Conversely, a negative funding rate means that vendors, or shorts, are in need of more leverage. There appears to be a little greater need for leverage longs based on the seven-day financing rate for SOL, which is comparable to that of ETH and Bitcoin. Given that the market capitalization of cryptocurrencies has increased by 10.5% in the last two weeks to exceed $1.4 trillion, which is the most since May 2022, the 0.4% weekly expense is typical.

There are inherent hazards when analyzing on-chain information obtained from semi-centralized systems with extremely low transaction fees since it is very easy to inflate certain indicators, especially those associated with decentralized banking. An example in point is the August 2022 disclosure made by a prior worker from Saber, a once-respected decentralized currency exchange on Solana, which revealed that doubling up was used to influence a sizable amount of an application's TVL.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.