Solana's native token, SOL, experienced a decline today, dropping by over 2.1% to approximately $145 on May 8. This correction follows a recent peak on May 7 when SOL reached around $160 before undergoing a 9% decrease since then. Several factors contributed to this downward movement, including a decrease in total-value-locked (TVL) across the Solana ecosystem and a growing demand for the U.S. dollar in recent days.

The decline in SOL's price began on May 7, coinciding with an announcement by FTX regarding funds allocated to compensate customers for losses incurred during its collapse in November 2022. FTX revealed its intention to distribute up to $16.3 billion in cash, with liabilities amounting to approximately $11 billion. To raise funds, FTX auctioned off a significant portion of its SOL holdings at discounted rates, resulting in a notable drop in SOL's price and signaling bearish sentiment among traders.

Despite assurances from FTX regarding adequate compensation funds, traders remain cautious due to the substantial amount of Solana tokens still held by FTX, potentially subject to further discounted auctions. Additionally, a decline in TVL across the Solana ecosystem further dampened demand for SOL, contributing to its price decline.

The ongoing recovery of the U.S. dollar index (DXY) has added pressure on Solana's performance, with a strong inverse correlation between DXY and SOL/USD observed. This trend reflects traders seeking refuge in the dollar following hawkish remarks by Minneapolis Fed President Neel Kashkari. Furthermore, SOL's recent overbought status, as indicated by its four-hour Relative Strength Index (RSI) exceeding 70, suggests a corrective phase, potentially forming a cup-and-handle pattern on the price chart. If this pattern unfolds as expected, SOL's price could target around $205, representing a significant upside potential from current levels.