Key takeaways:
SOL retail leveraged longs who entered Monday’s range high were partially flushed out during today’s decline to $205.
In spite of the temporary downturn, institutional-sized investors bought into the SOL price dip.
The primary reason for the sell-off is the looming risk of a US government shutdown, yet traders remain attentive to the Oct. 10 SEC Solana ETF deadline.
SOL (SOL) price sharply dropped to $204.17 on Tuesday as US stock markets fell on reports of an impending government shutdown on Oct. 1 following a failure by Democrats and Republicans to reach a funding agreement.
Despite the adverse news and conflict between political parties, the DOW, S&P 500, Nasdaq, and Russell 200 finished the trading day positively, with the DOW reaching another record high.
In line with the stock market trends, crypto markets followed suit, as Bitcoin (BTC) rebounded from an intra-day low of $112,656 to $114,400 at the time of writing. Most altcoins have not returned to their Monday peaks, but the recovery in BTC and stocks seems to have stemmed the decline in both large and small-cap cryptocurrencies.
SOL remains down 1.38% for the day but has reclaimed its median range from the weekly open, trading above $209.50. Data from Hyblock indicates that retail traders were primarily affected by the flush-out, while institutional investors (with 1 million to 10 million anchored CVD) are stepping in to purchase the dip.
Related: Pro Bitcoin traders’ perspective on BTC’s flash crash to $112.6K: Did anything change?
Charts indicate that late leveraged retail longs were liquidated in the drop to $205, but both retail and professional day traders seized the resulting negative funding rate as a chance to initiate new spot and leveraged longs.
Aside from the immediate reaction to the heightened likelihood of a US government shutdown, Bitcoin and SOL traders have opted to focus on several positive catalysts within the crypto market.
Bitcoin traders are particularly attentive to the expected upcoming series of Federal Reserve interest rate cuts and the potential appointment of a Trump-friendly Fed chair. Conversely, SOL traders anticipate that the rising wave of Bitcoin will elevate all altcoins, maintaining their focus on the SEC’s Oct. 10 deadline for deciding on various 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.
