Solana (SOL) buckled Thursday almost 6% over the past 24 hours to $98 as the previous weeks’ ecosystem frenzy and Solana-based meme coin rally showed signs of losing steam.
With the latest decline, SOL extended its pullback to over 20% from $125 on Monday, its highest price since April 2022, CoinDesk data shows. At press time, SOL pared some of its losses and was changing hands at slightly above $100.
Over the past three days, some $32 million worth of leveraged long positions – bets on higher prices – got liquidated as trading platforms forcibly closed trades due to insufficient margin, accelerating the pullback, CoinGlass data shows.
Solana-based meme tokens such as BONK and WIF, which saw meteoric rises earlier this month, are down over 50% from their all-time highs recorded in December, pointing to profit taking and cooling interest in participating in the frenzy.
Amid SOL’s pullback, the BNB Smart Chain’s native token (BNB) rallied 9% in the past 24 hours and took back the fourth spot in the cryptocurrency ranking by market capitalization from solana.
Why Solana’s SOL is down
Solana is one of the best-performing crypto assets of 2023 rallying 900% from around $10 in early January, rejuvenating its ecosystem after being one of the most beaten-down assets during the bear market.
However, the token was due for a short term pullback as the rally showed signs of overheating based on elevated fund rates for derivatives positions, David Shuttleworth, research partner at Anagram, said in an interview via X direct messages.
Trading data suggests traders were increasingly moving capital out of SOL to stablecoins, locking in profits or reducing their exposure to the token, Shuttleworth added.
“There was a quick rebalancing against long positions, many of which were caught out of position and overleveraged,” Shuttleworth told CoinDesk.
