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$3 billion drains from Solana in a day; What’s happening?

$3 billion drains from Solana in a day; What’s happening?

As the majority of assets in the cryptocurrency sector start to reverse the exceptionally bullish gains from previous weeks, some are correcting faster and more intensely than others, including Solana (SOL), which has lost over $3 billion from its market capitalization in a single day.

Specifically, Solana’s market cap has declined by over 6% in the last 24 hours, having dropped from $48.58 billion to $45.54 billion during this time, which represents a loss of $3.04 billion to its market value, as per data obtained from the crypto analytics platform CoinMarketCap on February 21.

Solana 24-hour market cap chart. Source: CoinMarketCap

Solana price analysis

In the meantime, the price of Solana has dropped 6.07% in the past 24 hours, adding up to the loss of 10.78% across the last seven days, but nonetheless still clinging to the 16.94% total gain accumulated over the previous month, and currently trading at $103.41.

Solana 24-hour price chart. Source: Finbold

Why is Solana declining?

Notably, the bearish streak coincides with the general change in sentiment across the wider crypto market, which seems to have enough impact to counter the positive developments for Solana, including its decentralized finance (DeFi) ecosystem surpassing $2 billion for the first time since June 2022.

Indeed, the total value locked in DeFi projects on the Solana network briefly crossed the $2 billion threshold on February 20, with the current value staked on it standing at $1.98 billion, according to the most recent information retrieved from the DeFi analytics platform Defi Llama on February 21.

Solana TVL since June 2022. Source: Defi Llama

On top of that, the layer 1 blockchain has announced integration with the decentralized file storage network Filecoin (FIL) to host Solana’s block history in the future, allowing the ecosystem and Solana-based projects to move away from centralized data storage solutions.

Upon the news, the price of Filecoin immediately started to rally and has increased 24% since the announcement, adding up to the gain of 32.77% on its weekly chart. However, Solana has failed to mimic this surge and threatens to fall further down as its relative strength index (RSI) dips below 50.

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