Solana (SOL) has taken a steep dive, shedding 25.22% of its value in the past 24 hours. The cryptocurrency, which recently surged on news of its inclusion in the U.S. digital asset reserve program, is now facing sharp sell-offs. Investors appear to be taking profits while broader economic concerns add to the pressure.
Profit-Taking Wipes Out Solana’s Recent Gains
Just a day ago, Solana was riding high after former President Donald Trump announced that the token would be part of a government-backed digital reserve. This move initially sent SOL soaring, but the gains were short-lived.
Traders quickly seized the opportunity to cash in on the rally. After climbing to a high of $170.47, Solana dropped back down to around $135.46. In the past week, the cryptocurrency has barely managed to stay in positive territory, up only 1% despite its recent spike.
One sentence says it all: market euphoria doesn’t last long in crypto.
AI-Driven Market Volatility Spills Over
Solana’s losses aren’t happening in isolation. Broader market jitters, particularly in artificial intelligence (AI) stocks, have weighed on investor sentiment.
Fresh reports suggest that China has found ways to sidestep U.S. restrictions on Nvidia’s high-end GPUs, a critical component in AI computing. This has rekindled concerns about the ongoing tech battle between the U.S. and China. The possibility of further government action or trade restrictions is making investors uneasy, leading to a sell-off in AI-related assets.
And as AI stocks took a hit, the ripple effect extended to Solana and the crypto market at large.
Tariffs on Mexico and Canada Add to Market Anxiety
Another factor stirring up uncertainty is the Biden administration’s confirmation that new tariffs on Mexico and Canada will go into effect tomorrow.
The market hates surprises, and tariffs bring plenty of them. Investors fear that these trade barriers could add to inflationary pressures, making it harder for the Federal Reserve to justify interest rate cuts. The prospect of prolonged high rates is unwelcome news for risk assets like cryptocurrencies, which thrive in a low-rate environment.
One thing is clear: macroeconomic shifts are increasingly dictating crypto’s short-term movements.
What’s Next for Solana?
- The cryptocurrency remains highly volatile, and sharp price swings aren’t unusual.
- Despite the recent pullback, Solana still has a market cap of around $81 billion.
- If selling pressure continues, the next key support level could be around $110, its 52-week low.
Solana’s drop may be steep, but it’s not necessarily the end of the road. Crypto investors have seen this movie before—big rallies, bigger corrections, and another rally just around the corner.
