- Solana has experienced a sustained decline over the past seven days.
- Despite the application of a Solana ETF, negative market sentiment persisted.
After a sustained downward trend, Solana [SOL] created more hype after 3iQ, a Canadian digital asset management company, filed for a SOL ETF. In Report, 3iQ reported on X,
“3iQ Corp is pleased to announce that we have filed a preliminary prospectus for the Solana Fund (QSOL) in Canada via an initial public offering.”
The QSOL application is a golden opportunity for traders and enthusiasts as it provides opportunities to profit from SOL staking profits.
Likewise, it expands the investment pool, expanding opportunities for those who want to earn an income while supporting the SOL ecosystem.
The approval of QSOL will bring diversity and open doors for other altcoins.
Essentially, the approval and success of QSOL would inspire other countries, especially the US, to open doors for similar schemes and continually consider the approval of ETFs for other small cryptocurrencies.
Market implications of the application of QSOL
Over the past seven days, SOL has experienced a significant downtrend. Despite the news about the QSOL application, the markets have failed to show positivity and reverse the trend.
However, several crypto analysts have expressed positivity about the development. For example, Ash Crypto shared his analysis on X and stated that:
Sol is now retesting its support level. Everything screams bullish for Solana.
Source: TradingView
Despite the excitement and bullish news, AMBCrypto’s analysis showed that market sentiment has remained bearish. At the time of writing, SOL was trading at $134.63, up 0.66% in the past 24 hours.
IOver the past seven days, it has fallen 6.53%, with a 62% drop in trading volume to $738 million. According to CoinMarketCapSOL’s market capitalization rose 0.59% in 24 hours to $62.2 billion.
Source: TradingView
SOL’s RSI has been falling continuously. At the time of writing, the RSI is 35 below the RSI-based MA of 38. Since breaking below the base MA on June 6, it has failed to reverse the trend, indicating selling pressure.
Continued selling pressure showed SOL plummeting toward oversold territory at the time of writing.
Source: TradingView
According to the Bollinger Bands, the next critical support for SOL was around 120. This showed potential for a further decline if it fails to hold the current support level.
The prevailing market sentiment
AMBCrypto’s analysis via Santiment showed a steady decline in Open Interest from $728 million to $636 million. The continued decline in Open Interest shows a reduced appetite and interest in the altcoins.
Lower interest rates mean fewer investors are closing losing positions without opening new ones, which is bearish market sentiment.
Source: Santiment
Similarly, Coinglass’ volume-weighted financing rates showed a steady decline. Lower funding rates mean increased negative sentiment as investors have less demand for leveraged long positions.
Source: Coinglass
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Will SOL recover or decline further?
AMBCrypto’s analysis indicated that SOL was on the downside towards the lower support level around $127.
If the altcoin holds this support level, it will challenge its resistance level at around $155. However, if the support level does not hold, it will fall to between $121 and $120.