Solana price has erased some of the gains made on Christmas Eve as most cryptocurrencies rallied. This sell-off has led to an increase in whale activity, with some notable ones swapping the SOL token for Hyperliquid’s HYPE. So, does the Solana coin have more gains to run or is the rally over?
Solana Price Downturn: What’s Behind the Decline?
Solana’s ongoing decline is mostly because of the weak sentiment in the crypto industry. Bitcoin price has retreated from near $100,000 this week to $96,000, while the popular watched crypto fear and greed index moved from extreme greed a few weeks ago to neutral. Cryptocurrencies often have a close correlation with each other.
Solana’s decline could be because of the ongoing profit-taking among investors after the coin more than doubled earlier this year. It is common for investors to sell highly profitable assets as the end of the year nears. As we will show below, there are some signs that some whales have started to dump SOL and moved to other cryptocurrencies.
Solana and other cryptocurrencies have also retreated after the Federal Reserve slashed interest rates by 0.25% in its December meeting. While this cut was good, the bank hinted that it would cut rates two times next year. That hawkish tone has led to higher bond yields, which historically affects risky assets.
More data shows that Solana’s DeFi TVL has been in a strong downward trend, which may be affecting its price. It dropped from $20 billion on December 20 to $5.7 billion on December 26.
Solana DeFi TVL
Whales Dumping SOL: What Does On-Chain Data Reveal?
On-chain data analysis is a good way to understand a token price movement. Whales or large token holders, often have more weight than traders. In this case, there are signs that some whales have started to dump their SOL holdings.
One whale dumped 45k SOL tokens and swapped them to Hyperliquid’s HYPE toke. According to HypurrScan, one of his wallets holds HYPE tokens worth $9.5 million, and another has over $10 million. This dump partially explains why the SOL price crashed.
This whale has a long history with Solana as he initially staked 1 million tokens in 2020, and has benefited from its surge and staking rewards. As such, his decision to exit the SOL trade is a sign that he wants to capitalize on the recently launched HYPE token.
Solana Whale Transactions
What’s Next for Solana Price? Will HYPE Replace SOL?
So, will the HYPE token replace SOL? Chances for the HYPE token replacing SOL are limited because the two are significantly different assets. Solana is a layer-1 network used by developers in key industries like DeFi and NFTs, whyle Hyperliquid is a perpetual futures trading platform.
The daily chart shows that the Solana price has been in a downward trend after rising to $265 earlier this month. It has formed a falling channel pattern and moved below the 50 Weighted Moving Average (WMA) indicator. The coin has flipped the key support at $210 into a support.
The falling channel has a close resemblance to a descending wedge, meaning that it may rebound, possibly in January. If this happens, the SOL price will rise to $265, its highest level this year.
A drop below the support at $175, its lowest level this month, will invalidate the bullish view and point to more Solana price sell-off, potentially to $120, the lowest point in September.
The post Solana Price Fizzles Out As Whales Dump SOL For HYPE appeared first on CoinGape.
