Why is Solana (SOL) price down today?
Solana price has slipped by over 6.25% in the last 24 hours to reach around $194.50 on Feb. 12. Key factors behind Solana’s bearishness today are:Crypto market sell-off after US Federal Reserve Chairman Jerome Powell’s hawkish outlook on interest rates.Decreasing Solana blockchain activity.Weakening technicals.Market wide sell-off weighs down SOL priceSolana’s drop appeared alongside other cryptocurrencies after Powell’s hawkish remarks during the Senate Banking Committee hearing on Feb. 11.Key points from his speech:The Fed’s policy stance is now less restrictive than before, and the economy remains strong.No urgency to adjust monetary policy at the moment.Cutting rates too fast or too much could hinder progress on inflation.Cutting rates too slowly or too little could weaken economic activity and employment.Market’s reaction after Powell’s remarks.Both short and long-term Treasury bond yields remained elevated, making the opportunity cost of holding highly-yielding assets more attractive than risk-on assets like Solana.The possibility of interest rates remaining the same at the Fed’s March 19 meeting now stands at 95.50% chance compared to 75.50% a month ago, according to the CME FedWatch tool.A rate cut is not fully priced in until September 2025.Fewer than two rate cuts are expected for the entire year.Less Solana onchain activity dampens SOL demandSolana’s bearishness is also evidenced by declines 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 Feb. 12 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 23,835 as of Feb. 12.This indicates suppressed network activity and less overall user interaction with the platform, hurting SOL demand.Additionally:Solana is underperforming further as interest in memecoins declines.Memecoins fueled Solana's 2024 bull run, playing a key role in its price surge.As of Feb. 12, the total market cap of Solana-based memecoins stands at approximately $11.15 billion.Official Trump (TRUMP), a memecoin linked to Donald Trump, is currently the largest in the sector and has crashed 80% from its peak.Most Solana memecoins have experienced sharp declines in recent days and weeks, signaling reduced investor appetite for SOL.Solana could drop another 40%Solana’s price drop appears to be part of its prevailing head-and-shoulders (H&S) pattern.Note that: An H&S pattern consists of three peaks: a higher central peak (head) flanked by two lower peaks (shoulders), with a common support level (neckline). The target price is estimated by measuring the distance from the head’s peak to the neckline and subtracting it from the neckline’s breakdown level.As of Feb. 12, SOL was forming the pattern’s right shoulder, eyeing declines toward the neckline support at around $180.50.A decisive breakdown below $180.50 increases the risks of Solana price dropping toward the H&S target of $109.21, down by over 40% from current prices. However, if SOL holds above the neckline, a potential recovery toward the local high of $215 could follow, invalidating the H&S outlook.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.