Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
SOL price faces potential 20% decline following Grayscale Solana Trust’s launch for retail investors.
On April 17, the value of Solana’s SOL (SOL) experienced a decline, mirroring similar downward trends among leading cryptocurrencies, such as Bitcoin (BTC) and Ether (ETH).
SOL’s price fell by more than 4%, dropping below $24.50 after reaching $26 — a two-month peak — earlier in the day.
In contrast, BTC and ETH saw their prices decrease by 3.5% and 3%, respectively, indicating a bearish start to the week.
SOL/USD hourly price chart. Source: TradingView
SOL price undergoing a technical correction
The selloff of SOL/USD on April 17 commenced after it entered its resistance range for 2023.
Significantly, the $25–$27 price zone has limited SOL’s upward movements since January 2023. Previous tests of this resistance have led to corrections ranging from 25% to 40% on several occasions this year, as shown below.
SOL/USD daily price chart. Source: TradingView
The likelihood of a sharp bearish reversal in April has increased as SOL’s price re-enters this range and its daily relative strength index (RSI) hovers near the overbought level of 70.
In this bearish scenario, the immediate downside target appears to be approximately $20, which is about 20% lower than current prices.
On the other hand, a significant breakout above the $25–$27 price range could see SOL’s price rise toward $30, a level that acted as support from August to October 2022.
Related Posts
This breakout could potentially extend to $35 over the coming months, aligning with SOL’s 50-week exponential moving average (the red wave in the chart below).
SOL/USD weekly price chart. Source: TradingView
Grayscale Solana Trust goes public
On April 17, Grayscale Investments, based in the U.S., announced that its Grayscale Solana Trust had commenced trading on OTC Markets under the ticker GSOL.
Related: Solana overcomes FTX fiasco — SOL price gains 100% in Q1
To summarize, Grayscale Solana Trust is a security that derives its value from the spot price of SOL. This trust allows investors to gain exposure to the Solana market while circumventing the complexities of purchasing, storing, and securing SOL directly.
Interestingly, following the announcement, SOL’s price fell by as much as 4.4%, indicating that traders likely “sold the news” regarding the launch of an institutional Solana investment product.
SOL/USD hourly price chart. Source: TradingView
One factor contributing to the bearish start for GSOL is the overall condition of Grayscale trusts. Notably, they function like closed-end funds, meaning Grayscale cannot issue new shares or withdraw shares from the open market to respond to capital inflows or outflows.
Consequently, the share price of the Solana trust may diverge from its net asset value. This situation could alarm investors in a bear market when their GSOL begins trading at a discount compared to the value of Grayscale’s SOL reserves, similar to the Grayscale Bitcoin Trust.
As of April 17, the holdings per share of Grayscale Solana Trust had increased by approximately 148% year-to-date, reflecting identical gains in SOL/USD.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making a decision.
