Solana (SOL 8.27%) happens to be one of my top long-term picks in the cryptocurrency sector. With its ultra-fast and low-cost network driving considerable developer activity and user growth, Solana is among the leading blockchains where "stuff actually happens." So, for investors who are bullish on the sort of real-world utility this sector can create, Solana ought to be a go-to option to at least consider.
CRYPTO: SOL
Key Data Points
That said, Solana's decline of 8.7% over the past 24 hours (as of 2:45 p.m. ET) suggests that some in the crypto community are looking for ways to diversify away from this sector. Given Solana's historical volatility, any sort of indication that the crypto market could be headed in the wrong direction (overall crypto market cap is more than 3.5% lower over the past day, at the time of writing) could be reason enough to sell one's winners.
Here's what appears to be playing into Solana's decline today.
Liquidations pointing in wrong direction
Image source: Getty Images.
Despite the launch of new spot Solana exchange-traded funds (ETFs), which have drawn in hundreds of millions of dollars from investors, there's plenty for Solana investors to worry about on the macro front. Whether we're talking about volatility in all financial markets tied to monetary, fiscal, and trade policy shifts or simply concerns about overvaluation in some asset classes (like crypto) that have been on a tear, investors are clearly taking a breather right now.
Today's decline in Solana actually doubles its weekly loss to nearly 17% at the time of writing. This comes as liquidations activity for Solana perpetual futures has surged, indicating that a number of leveraged positions betting on Solana to head higher have been wiped out.
When this happens, losses for other investors can be exacerbated as forced selling activity amplifies losses. At the time of writing, long liquidations (blown up bullish bets on Solana) far outpace short liquidations, at $277.4 million versus $33.3 million.
