On April 17, the price of Solana (SOL) moved lower on the back of similar price movements in major cryptocurrencies, including Bitcoin (BTC) and Ether (ETH).
The SOL price fell more than 4% below $24.50, despite rising as high as $26 – a two-month high – earlier in the day.
By comparison, hehe prices of BTC and ETH fell 3.5% and 3%, respectively, which points to a bearish start to the week.
SOL price on a technical correction
The April 17 SOL/USD sell-off began after it entered its 2023 resistance range.
In particular, the $25-27 price zone has limited Solana’s bullish attempts since January 2023. Testing it as resistance has preceded 25-40% corrections multiple times this year, as illustrated below.
The possibility of a sharp bearish pullback in April has now increased as SOL price ranges back and its daily RSI remains around the 70 overbought threshold.
In this bearish scenario, the immediate downside target appears to be around $20, roughly 20% below current prices.
On the contrary, A decisive break above the $25-27 price range could see SOL price rally towards $30, which served as support in Aug-Oct 2022.
Such a breakout could extend to $35 in the coming months, and this level coincides with the SOL 50-week exponential moving average (the red wave on the chart below).
Grayscale Solana Trust goes public
On April 17, the American company Grayscale Investments announced that its fund Grayscale Solana Trust has begun trading on the OTC markets under the symbol: GSOL.
To recap: andhe Grayscale Solana Trust is a security that derives its value from the spot price of the SOL. In this way, the trust allows investors exposure to the Solana market without having to directly purchase, store and custodian SOL.
Interestingly, the price of SOL fell as much as 4.40% after the announcement, which suggests that the traders probably “sold the news” that an institutional investment product was going to be made public in Solana.
One of the reasons for GSOL’s bearish debut is the current state of Grayscale Trusts as a whole. In particular, they act as closed-end funds, meaning that Grayscale cannot issue new shares or withdraw shares from the open market to adjust for capital inflows or outflows.
Consequently, the price of Solana Trust shares may deviate from net asset value. This could spook investors in a bear market when its GSOL starts trading at a discount to the value of Grayscale’s SOL reserves, similar to the Grayscale Bitcoin Trust (GBTC).
As of April 17, Grayscale Solana Trust’s shares per share had risen about 148% year-to-date on identical gains in the SOL/USD pair.
This article does not contain investment advice or recommendations. All investments and trades involve risk, and readers should do their own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.