Solana (SOL) saw a decline of 4% in its USD pairing on April 17th, dragging its two-month high of $26 down to prices below $24.50. The bearish market sentiment was shared among top-ranking cryptocurrencies, Bitcoin (BTC) and Ether (ETH) both falling around 3.5% and 3%, respectively. This move could be attributed to the asset's attempt to breach the 2023 resistance price range of $25-27. Historically, such attempts have been met with sharp corrections of 25-40%.

With current prices hovering in the said price range and the daily relative strength index (RSI) of SOL reaching overbought levels of 70, the possibility of a further drop to the immediate downside target at around $20 appears high. However, a decisive break-out above the $25-27 resistance range could open the door to higher levels, going as high as $30, a price area that acted as support for Solana in August-October 2022. In the best scenario, a break-out could even see prices reaching up to $35, coinciding with SOL's 50-week exponential moving average.

These movements come days after the launch of Grayscale's Solana Trust, a security deriving its value from the SOL's spot price, on OTC Markets. Investors are now able to gain exposure to the cryptocurrency market without having to deal with the challenge of buying, storing, or safekeeping SOL tokens directly. Despite the initial celebration, SOL's price dropped shortly after news of the product's debut spread, likely due to the current state of Grayscale Trusts.

Grayscale Trusts are considered closed-end funds, meaning that they are unable to engage in the process of issuing new shares or removing them from the open market. As such, the Solana Trust's share price could end up deviating from the net asset value– causing investor anxiety in a bear market when the GSOL starts trading at a discount versus the value of Grayscale's SOL reserves, similar to the Grayscale Bitcoin Trust (GBTC).

As of April 17, Grayscale's Solana Trust had seen impressive 148% year-to-date returns, mirroring the performance of SOL/USD during that same period. As the cryptocurrency market continues to be unpredictable, the future of SOL remains uncertain. Despite the potential of achieving higher highs with a decisive break-out, the risk of a sharp bearish reversal should not be overlooked.



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