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Long positions in SOL retail that were established at the peak of Monday’s range experienced significant selling pressure as the price dropped to $205 today.
In spite of the temporary price drop, large institutional investors took the opportunity to purchase SOL at a lower price.
The primary factor behind the sell-off is the risk of a US government shutdown, but traders are maintaining their focus on the SEC’s Solana ETF deadline set for October 10.
The price of SOL (SOL) unexpectedly dropped to $204.17 on Tuesday, coinciding with a broader sell-off in US stock markets due to news of an impending government shutdown on October 1, following failed funding negotiations between Democrats and Republicans.
Amid the negative news cycle and the tensions between political factions, major indices like the DOW, S&P 500, Nasdaq, and Russell 2000 ended the trading session positively, with the DOW reaching another historic peak.
As expected, the crypto markets mirrored the movements of the stock markets, with Bitcoin (BTC) recovering from a low of $112,656 to $114,400 at the time of this writing. While most altcoins haven’t yet regained their highs from Monday, the resurgence in Bitcoin and stocks seems to have at least halted the decline in both large and small-cap cryptocurrencies.
Currently, SOL is down 1.38% for the day but has regained its median price range from the weekly open, trading above $209.50. Data from Hyblock indicates that retail traders were primarily affected by the sell-off, whereas institutional investors (with anchored CVD between 1 million to 10 million) have stepped in to purchase during the dip.
Related: Perspectives from Bitcoin traders on BTC’s sharp drop to $112.6K: What has changed?
Charts indicate that recent leveraged retail longs were liquidated when the price fell to $205, but both retail and professional day traders saw the ensuing negative funding rate as a prime chance to initiate new spot and leveraged long positions.
Aside from the immediate reactions to the potential US government shutdown, both Bitcoin and SOL traders are focusing on various positive developments within the crypto market.
Bitcoin traders are paying close attention to the expected trio of interest rate cuts by the Federal Reserve and the possibility of a Fed chair friendly to Trump being appointed. Meanwhile, SOL traders anticipate that the upward trend in Bitcoin will positively impact all altcoins and are looking ahead to the October 10 deadline from the US Securities and Exchange Commission regarding several spot SOL ETF approvals.
This article does not constitute investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own due diligence before proceeding.
