Solana’s native token, SOL (SOL), is down today, falling by over 2.1% to reach approximately $145 on May 8. The losses are part of a correction that started a day prior when SOL price topped out at its local high of around $160, only to fall by around 9% since.Multiple factors have adversely affected SOL’s price performance today, including a retreat in the total-value-locked (TVL) across the Solana ecosystem and an increasing appetite for the U.S. dollar in recent days.FTX raises funds to compensate bankruptcy victimsSolana’s price started declining on May 7, just hours after FTX announced that it had more than enough funds to compensate for what its customers lost during its collapse in November 2022.Once it completes the sale of all its assets, FTX will have up to $16.3 billion in cash available for distribution, the company has stated. It has liabilities of approximately $11 billion owed to customers and other non-government creditors.In bankruptcy proceedings, lower-ranking creditors typically receive minimal returns. However, FTX has capitalized on a cryptocurrency market rally, particularly with Solana, which comprised 34.2% of its holdings. FTX has auctioned these SOL holdings at steep discounts to secure funds to compensate customers. In April, it sold nearly two-thirds of its SOL reserves to Galaxy Trading, Pantera Capital, and Neptune Digital Assets at a 63% discount.SOL’s price plummeted by up to 37% following the auction, suggesting that traders view the discounted sales of Solana to hedge funds as a bearish signal for the cryptocurrency.The sentiment among Solana traders looks the same after FTX’s assurance that it would have more than the required funds to compensate creditors. This is largely due to FTX still holding a substantial amount of Solana tokens, estimated between 11 million and 15 million SOL, subjected to further discounted auctions.However, there exists a 4-year vesting schedule that prevents these tokens from being traded until the deadline elapses.Solana TVL falls to a new monthly lowSOL’s price decline today coincides with a decrease in TVL across the Solana ecosystem.Notably, as of May 8, Solana’s TVL was 26.92 million SOL, the lowest in the month, versus 28.22 million a day prior. Since TVL often involves the staking or locking of SOL tokens in various protocols for DeFi operations like lending, trading, or liquidity provision, a drop in TVL reduces the demand for SOL. Lower demand leads to lower prices, assuming other market conditions remain constant.Dollar recovery pressures crypto lowerSolana’s underperformance further coincides with the ongoing recovery of the U.S. dollar index (DXY).Notably, the index, which measures the greenback’s strength against a basket of top foreign currencies, has rebounded to 105.64 on May 8, up by over 1% when measured from its local low of $104.52 established three days ago.The 30-day average correlation coefficient of -0.75 between DXY and SOL/USD as of May 8 indicates a strong inverse relationship between the two assets. Fundamentally, most SOL traders are seeking the safety of the dollar after the Minneapolis Fed President Neel Kashkari’s hawkish message.Overbought SOL price correctionToday’s decline in Solana’s price is part of a correction that began after its four-hour Relative Strength Index (RSI) exceeded 70, entering into what is considered overbought territory. This is a common indicator that often precedes market sell-offs.Related: Buy altcoins now, but sell before ‘mid-2025’: Charles Edwards, X Hall of FlameInterestingly, the ongoing correction is developing what appears to be a cup-and-handle pattern. This pattern features a U-shaped recovery representing the cup, followed by a corrective phase forming the handle, all occurring below a common resistance line known as the neckline.A cup-and-handle pattern resolves after the price breaks above the neckline and rises by as much as the height between the cup’s trough and neckline. Applying this technical rule on SOL’s chart brings its May upside target to around $205, up around 40% from the current price levels.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
