Important Insights:
SOL retail leverage longs who entered at the week’s peak were partially liquidated during today’s drop to $205.
In spite of the brief decline, institutional-size investors took the opportunity to purchase the SOL dip.
The primary cause of the sell-off is the looming US government shutdown, yet traders are eyeing the SEC’s Solana ETF deadline on October 10.
The price of SOL (SOL) suddenly dropped to $204.17 on Tuesday as US stock markets reacted to the news of a potential government shutdown on October 1 due to a lack of agreement between Democrats and Republicans on funding.
Despite negative headlines and discord among political parties, the DOW, S&P 500, Nasdaq, and Russell 2000 closed the trading day positively, with the DOW hitting another record high.
As expected, the cryptocurrency markets mirrored the stock market’s movements, with Bitcoin (BTC) bouncing back from an intra-day low of $112,656 to $114,400 at the time of writing. While most altcoins have not yet regained their Monday peaks, the bounce in BTC and stocks seems to have halted the downturn for both large and small-cap cryptocurrencies.
Currently, SOL is down 1.38% for the day but has recovered to its median range from the weekly open, trading above $209.50. Data from Hyblock indicates that retail traders faced the brunt of the liquidation, while the institutional investor segment (with 1 million to 10 million anchored CVD) shows larger players stepping in to capitalize on the decrease.
Related: Pro Bitcoin traders’ perspective on BTC’s rapid fall to $112.6K: Did anything change?
Charts indicate that late leveraged retail longs were liquidated as the price fell to $205, but both retail and professional day traders viewed the ensuing negative funding rate as a chance to enter new spot and leveraged longs.
Beyond the immediate reaction to the increasing likelihood of a US government shutdown, Bitcoin and SOL traders have chosen to concentrate on the many positive catalysts present in the crypto market.
Bitcoin traders are focused on the expected trio of forthcoming Federal Reserve rate cuts and a potentially Trump-friendly Fed chair likely to be appointed. In contrast, SOL traders are hopeful that Bitcoin’s upward movement will elevate all altcoins, and they are keeping their attention on the SEC’s October 10 deadline for making decisions on various spot SOL ETFs.
This article does not provide investment advice or recommendations. Every investment and trading action carries risk, and readers should perform their own research before making decisions.
