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Solana ETF In The Making But SOL Keeps Declining — Will It Bounce From $120 Support?

Last Updated June 21, 2024 3:13 PM
Nikola Lazic
Last Updated June 21, 2024 3:13 PM

Key Takeaways

  • 3iQ files North America’s first Solana ETP, QSOL.
  • QSOL tracks SOL’s USD price and Solana network staking yields.
  • SOL price decline may approach the critical $120 support level.

The cryptocurrency market is still abuzz with Bitcoin and Ethereum ETFs, and it looks like Solana is next. New developments in Canada could set the stage for one asset management company to apply an exchange-traded product (ETP) similar to the ETF as a derivative. 

Meanwhile, the price of SOL is in a downtrend from May 21, losing 32% of its value as it fell from $191 to a low of $130 today, June 21. With its significant support of $120 getting close and this positive news, can we see an upturn in SOL? 

3iQ Files Solana ETP 

3iQ, a leader in digital asset management, has introduced the first Solana ETP (exchange-traded product) in North America, QSOL. This ETP will provide investors with exposure to the SOL cryptocurrency. Much like the ETF, it will track SOL’s daily USD price movements and capitalize on staking yields from the Solana network, expected to be between 6% and 8%. 

The firm has partnered with Canaccord Genuity for the offering. Tetra Trust and Coinbase Custody Trust Company, LLC serve as custodians, employing Coinbase Custody’s staking infrastructure.

This move by 3iQ aligns with its history of pioneering digital asset products in Canada, including the first publicly traded Bitcoin and Ether funds. QSOL aims to establish a regulated investment avenue for individual and institutional investors, further expanding the range of accessible crypto asset investment options. Internationally, Solana ETPs represent over $1 billion in assets, and the launch of QSOL could pave the way for additional Solana-based investment products in North America, reflecting Canada’s progressive stance on cryptocurrency investments compared to the U.S.

SOL Price Analysis 

On March 18, the price of Solana peaked at $210, but it fell sharply to $120 by May 1, marking a 43% decline. The price then recovered impressively to nearly $190 by May 21, breaking through a crucial resistance level that had previously served as support.

SOL
SOLUSD | Credit: Nikola Lazic/Tradingview

After this recovery, SOL initially showed potential for additional gains, but it soon declined and fell back below this critical level. This downturn from May 1 has been characterized by three distinct waves, indicating a possible prolonged bearish trend. The break below the $160 mark confirmed that the surge to May 21 was merely a three-wave corrective pattern, suggesting that the current downturn could be part of a larger bearish phase or a complex three-wave correction starting from March 18.

Looking ahead, several outcomes are possible based on the trajectory of the current decline. An examination of the hourly chart reveals potential for further drops as the $120 support zone nears. SOL might consolidate around this level, forming a base for the fourth wave before potentially descending to a new low at $102 in its fifth wave, mirroring the length of the decline from March 18 to April 13.

This could complete a three-wave ABC correction. If the decline extends below $102, the next target could be the 1.618 Fibonacci extension level at $50, although SOL would first need to break through a significant support level at $80.

Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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