Why is Solana (SOL) price down today?

Solana’s native token, SOL , is down 3% on Jan. 29 amid corrections across the broader cryptocurrency market. Data from Cointelegraph Markets Pro and Coinbase shows SOL trading at $231, 23% below its $294 all-time high reached on Jan. 19. Key factors behind Solana’s bearishness today are:Marketwide sell-off ahead of the US Federal Reserve’s decision on interest rate cuts.Decreasing investor interest in SOL’s decentralized finance (DeFi) ecosystem.Weakening technicals point to deeper losses, with bears eyeing a $182 SOL price.Marketwide sell-off weighs down SOL priceSolana corrects alongside other cryptocurrencies, which have also dropped ahead of the Federal Open Market Committee’s (FOMC) decision on interest rate cuts.Key points:Bitcoin , the largest cryptocurrency by market capitalization, led the losses on Jan. 29 and is down 0.3% over the last day to trade at $102,397 at the time of writing.Ether has declined more than 1.87% over the last 24 hours to trade just below above $3,100. Other top-cap cryptocurrencies, including BNB Chain’s, XRP , and Dogecoin , have also posted significant losses over the last 24 hours.The total crypto market capitalization has decreased by 1% over the last 24 hours to rest at $3.49 trillion on Jan. 28.This performance in the crypto market comes as market participants wait for the US Federal Reserve’s decision on interest rates.What to expect:The FOMC, which has been meeting since Jan. 28, is expected to make a decision on interest rate cuts today, Jan. 29.There’s a strong consensus among market observers and analysts that the central bank will keep the Federal funds rate steady at its current range of 4.25% to 4.5%. The possibility of interest rates remaining the same at the Fed’s Jan. 29 meeting now stands at a 99.5% chance, according to the CME FedWatch tool.Market participants are waiting to see whether Fed Chair Jerome Powell will give a hawkish or dovish outlook with a knock-on effect on prices of risk-on assets, including Solana.Decreasing TVL on SolanaSOL’s price drop today is preceded by a drop in the total value locked (TVL) in its DeFi applications, as per data from DefiLlama. Key points:Solana’s TVL has been in a downtrend since Jan. 19. This metric has fallen by 10% over the last 10 days, from $12.9 billion on Jan. 19 to $11 billion at the time of publication.Several layer 2 protocols, such as Jito and Raydium, have posted 4% drops in TVL over the last seven days, respectively, contributing to the drop in the value of the underlying network.The declining TVL reflects traders’ waning interest and could indicate that Solana is struggling to attract new users.Solana’s bearishness is also evidenced by a decline in onchain activity within the Solana ecosystem, according to the data provided by Dune dashboard pump.fun. What to know:SOL’s price drop on Jan. 29 was preceded by a sharp drop in the number of network transactions.The amount of daily transactions on the Solana blockchain has dropped from an all-time high of 71,738 on Jan. 23 to 59,076 on Jan. 28, as shown in the chart below.This indicates suppressed network activity and less overall user interaction with the platform, resulting in lower revenues from fees. SOL price action invalidates the bull flag From a technical standpoint, today’s losses in SOL signify the invalidation of the altcoin’s breakdown of a bull flag triggered by a market downturn in the wider crypto market.Key points:Solana’s price drop below $235 on Jan. 28 saw it drop below the lower boundary of a bull flag, flipping into resistance.If this resistance line holds, SOL may drop toward the start of the flag at $182, down about 20% from the current price levels.In addition, the sharp drop in SOL’s daily relative strength index (RSI) from its overbought area of 73 on Jan. 18 to the current value of 50 suggests the market conditions still favor the downside.According to popular analyst Kwantxbt, SOL price must hold the support at $225 to avoid deeper corrections toward the $200 psychological level.“Support at $225 is crucial, if it breaks, expect $200.”This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.