What Influences SOL Price?
There are various factors that might influence the rise and fall of Solana’s price. Below are some of the most common factors that can impact the price of SOL.
Crypto Market Crashes
If the crypto market crashes, so can the price of cryptocurrencies. Different factors can cause the market to crash. These include interest rates, inflation, and other factors that affect how confident people feel investing their money in volatile markets. Moves by the Federal Reserve to combat high inflation and stabilize markets can also cause the crypto market to crash. This can, in turn, lower the price of cryptocurrencies such as SOL.
Other factors that can cause crypto crashes include lack of liquidity in cryptocurrency markets, security breaches, and regulation.
FED Influences in the Money Market
FED influences in the money market is another factor that can affect the price of cryptocurrencies like SOL. These influences can cause shockwaves in the entire monetary ecosystem. The Federal Reserve is known to raise interest rates during times of high inflation, which can impact crypto prices.
Competition
New and promising crypto projects can also impact the price of established crypto coins like Solana. There are thousands of cryptocurrency coins available, while new tokens and projects are constantly being created. So, if a new competitor gains momentum, it can take value from the existing competition. As new tokens and projects are created, this could drive the price of SOL down, while the new competitor’s price rises.
Use Cases
Solana has a wide range of use cases. Hundreds of developers build their projects on the Solana blockchain. Others use the network to mint, sell, and trade NFTs. Yet, many are using Solana due to its fast and cheap transactions. When a blockchain has a wide variety of uses, that drives up its value, which in turn, increases the price.
Network Downtimes
Sometimes, blockchains experience network outages, often due to the emergence of new ways of achieving consensus. Solana is one of those blockchains that has had frequent network outages, which can cast doubts on the centralization issue and scare some investors away. This, in turn, can lower the price of the asset in the market.
Potential delistings in the US
In June 2023, it became known that the U.S. Securities and Exchange Commission (SEC) considers the popular cryptocurrencies Cardano (ADA), Polygon (MATIC), and Solana (SOL) to be non-registered securities. The SEC considers trading these cryptocurrencies in the U.S. to be illegal because it’s impossible to protect investors’ rights. This position of the SEC is expressed in the lawsuit against Coinbase and Binance US that are charged with illegal trading.
The Robinhood broker and several other providers of cryptocurrency trading services have announced that they will delist ADA, SOL, and MATIC.
Representatives of the cryptocurrency projects have stated that the accusations are groundless. Nevertheless, after this news was published, capitalization of the cryptocurrencies mentioned in the lawsuit fell rapidly. Traders Union’s analysts believe that the price of these tokens will be under pressure from sellers until the situation is settled. At the same time, it should not be ruled out that in case of a successful settlement of the situation, the price may rise very significantly.