Key takeaways:
SOL retail leveraged longs who entered at the high of Monday’s range were partially liquidated during today’s decline to $205.
Despite the temporary drop, institutional-sized investors took advantage of the SOL price dip.
The impending risk of a US government shutdown is primarily responsible for the sell-off, yet traders remain attentive to the Oct. 10 SEC deadline for Solana ETFs.
SOL (SOL) price sharply dropped to $204.17 on Tuesday as US stock markets reacted negatively to news indicating that the government might shut down starting Oct. 1 due to a lack of funding agreement between Democrats and Republicans.
In spite of the unfavorable news and discord among political factions, the DOW, S&P 500, Nasdaq, and Russell 200 all closed with gains, with the DOW reaching another record high.
As expected, crypto markets mirrored the stock market’s performance, with Bitcoin (BTC) recovering from an intra-day low of $112,656 to $114,400 at the time this was written. While most altcoins have not yet regained their previous highs from Monday, the bounce in BTC and equities seems to have at least halted the downward trend in both large and small-cap cryptocurrencies.
SOL is currently down 1.38% for the day but has regained its median range since the weekly open, now trading above $209.50. According to data from Hyblock, retail traders faced the biggest losses during the liquidation, while larger institutional investors (1 million to 10 million anchored CVD) have started buying the dip.
Related: Pro Bitcoin traders’ view on BTC’s flash crash to $112.6K: Did anything change?
Charts indicate that late leveraged retail longs were liquidated as the price fell to $205, but retail and professional day traders recognized the negative funding rate as a chance to start fresh spot and leveraged longs.
In light of the immediate reaction to the potential US government shutdown, traders of Bitcoin and SOL have decided to concentrate on the numerous positive factors in the crypto market.
Bitcoin traders are still focused on the anticipated trio of upcoming interest rate cuts from the Federal Reserve and possible appointment of a Trump-friendly Fed chair. Meanwhile, SOL traders are optimistic that Bitcoin’s upward momentum will benefit all altcoins, as they keep an eye on the SEC’s Oct. 10 deadline for decision-making on several spot SOL ETFs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
