Solana’s recent SEC classification as a security has made headlines, putting SOL’s price movement in a challenging position. With investors closely monitoring its performance, SOL’s price is currently at $15.45, representing a seven-day decline of 23.13%, according to CoinMarketCap.
As the market remains uncertain, the question arises whether Solana will be able to recover from its recent downturn and regain its upward trend.
SOL faces a steep decline as support levels are broken
Last week was a challenge for Solana (SOL) as it experienced a sharp decline, breaking through the critical support zone between $16.7 and $18.8. This downward spiral was triggered by a weekend sell-off that coincided with Bitcoin’s retest of $25,000.
As SOL fell below the trendline resistance and March low of $16, it shifted towards a bearish trend. For SOL to regain upward momentum, it is heavily reliant on Bitcoin breaking above $26,600 and successfully surpassing the $27,000 threshold. However, without this upward trend, bulls could face the challenge of breaking through the confluent area near the $17 mark, which combines bullish order book support and trendline resistance.
A possible rejection at this critical point may trigger further declines in the SOL price and potentially bring it towards support levels of $14.9 or even $12.8.
Solana Foundation disagrees with SEC classification of SOL as a security
In separate lawsuits filed against popular cryptocurrency exchanges Binance and Coinbase on June 5 and 6, the SEC classified the SOL token as a security. The SEC’s classification was based on various factors, including the expectation of profits from the efforts of others and the way the tokens are used and promoted.
The Solana Foundation addressed the SEC’s classification of SOL as a security via Twitter, expressing its disagreement. In a statement, the foundation stated, “The Solana Foundation disagrees with the classification of SOL as a security.”
According to the SEC, the term “security” not only includes traditional investment instruments such as stocks, bonds, and transferable shares but also extends to “investment contracts.”
By labeling SOL as a security, the SEC signals their intention to subject the token to security regulations, which could have significant implications for Solana and its ecosystem.
The classification will likely lead to further investigations and discussions about the nature and regulatory status of cryptocurrencies in the evolving legal landscape. The current market cap of SOL is $6.16 billion.
Featured image from APKPure.
