After a remarkable price surge between May 15 and 22, Solana has experienced a significant decline over the past several days. The altcoin now shows activity from both bullish and bearish forces, making this a critical period for Solana's price movements. The market could shift in any direction in the coming hours.

Earlier this month, Solana hit a high of $187.39, approaching its peak from March. However, a sudden drop has brought the price back down to where it started.

Let's explore the reasons behind Solana's recent price drop and predict whether it will rise or fall next.

Why Is Solana's Price Falling?

The possibility of a decline in Solana's price became evident after rumors about its biggest competitor, Ethereum, gaining ETF approval began to circulate. Bloomberg analysts had previously suggested a 75% chance of Ethereum ETF approval due to hints from the SEC, and the approval indeed followed. This news caused Solana's price to plummet to a low of $163.38. Although the price has since rebounded to $169.70, with a market cap of $76,264,513,063, the trading volume has decreased by 56%.

Solana Price Analysis

Following the Ethereum ETF approval, Solana's PoS validators began unstaking large amounts of SOL tokens, with 3.5 million tokens being unstaked between May 20 and 24. These unstaked tokens are now worth over $594 billion, while the total staked tokens have dropped to 365.3 million.

A significant reduction in staking can lead to temporary instability in Proof of Stake networks.

What's Next for Solana?

Solana is currently in a correction phase, recovering from an overbought condition earlier this week. The Ethereum ETF news has put selling pressure on Solana, contributing to its price drop. However, Solana's price has started to rise again, gaining 2.5% since yesterday. More gains may follow as the market adjusts to the Ethereum ETF hype.

Moreover, discussions about a Solana ETF have already begun among crypto leaders and companies, given that Solana is one of the top cryptocurrencies after Bitcoin and Ethereum in terms of market demand. For now, Ethereum's dominance is affecting Solana's price, causing investors to take profits amid fears of further declines.

Despite this, analysts believe Solana could still recover and reach $216 in the coming days. Technical indicators like the Moving Average Convergence Divergence (MACD) currently suggest a potential price surge.

Conclusion

In conclusion, Solana is navigating a critical phase, with both bullish and bearish forces at play. While Ethereum's ETF approval has created selling pressure, the market is beginning to stabilize, offering a potential rebound for Solana. Investors should watch for further developments as Solana could still achieve significant price targets in the near future.