$3 billion drains from Solana in a day; What’s happening?

 

Some cryptocurrency assets—like Solana (SOL), which has lost more than $3 billion in market value in a single day—are correcting faster and more aggressively than others as the bulk of them begin to undo the extraordinarily bullish gains from prior weeks.

According to statistics taken from the cryptocurrency research platform CoinMarketCap on February 21, Solana's market cap has decreased by more than 6% in the last day, going from $48.58 billion to $45.54 billion. This implies a loss of $3.04 billion to its market worth.

Solana 24-hour market cap chart. Source: CoinMarketCap

Solana price analysis

Meanwhile, the price of Solana has decreased by 6.07% in the last day, bringing the total loss over the last seven days to 10.78%. Despite this, the price is still trading at $103.41, holding onto the 16.94% gain that it had over the previous month.

Solana 24-hour price chart. Source: Finbold

Why is Solana declining?

The bearish trend is significant because it aligns with the overall shift in the wider crypto market attitude, which appears to be strong enough to offset Solana's favorable developments, such as the company's decentralized finance (DeFi) ecosystem topping $2 billion for the first time since June 2022.

In fact, as of February 21, the most recent data gathered from the DeFi analytics platform Defi Llama, the total value locked in DeFi projects on the Solana network momentarily surpassed the $2 billion level, with the current value staked on it being at $1.98 billion.

Solana TVL since June 2022. Source: Defi Llama

Furthermore, Solana's block history will eventually be hosted by the layer 1 blockchain thanks to its connection with the decentralized Filecoin (FIL) network. This will enable the ecosystem and applications built on Solana to shift away from centralized data storage options.

🔥🔥🔥

I am really excited to see this launch. Huge thanks to @Filecoin for building an awesome decentralized archive layer.

And to @triton_one, who did a ton of work to ship this!

🔥🔥🔥 https://t.co/d08obtlrfl

— toly 🇺🇸 (@aeyakovenko) February 17, 2024

 As soon as the news was out, Filecoin's price began to rise. It has subsequently gained 24%, totaling a gain of 32.77% on its weekly chart. Solana, on the other hand, has not been able to replicate this spike and now faces a further decline as its relative strength index (RSI) falls below 50.

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