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Memecoin launches and a sluggish Bitcoin price could continue to put downward pressure on the SOL token, which could be the next major crypto to receive a spot ETF.
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The Solana token’s price saw a double-digit decline this past week as memecoin launch platform Pump.fun continues to sell its holdings.
Solana (SOL) price fell over 12% in the week leading up to 11:06 am UTC, Sept. 4, to trade at $128. The token is down 3.8% on the daily chart, according to Cointelegraph data.
SOL/USD, 1-week chart. Source: Cointelegraph
Solana’s price decline comes after the fee account associated with memecoin deployer Pump.fun sold another $1.38 million worth of SOL tokens, according to a Sept. 3 X post by Lookonchain, that wrote:
“The Pump.fun Fee Account sold 10,300 $SOL ($1.38M) at $134.46 again 40 mins ago!”
Pump.fun Fee account, Solana sales. Source: Lookonchain
With this latest transaction, Pump.fun has sold a total of $41.64 million worth of SOL tokens at an average price of $157.50 per coin.
Whales, or large crypto-holding entities, can have a significant impact on a cryptocurrency’s price action due to the high amount of market-moving capital. Traders often follow whale selling patterns for cues on a cryptocurrency’s short-term price trajectory.
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Are memecoins pressuring Solana’s price?
The current memecoin craze on Solana could be what’s pressuring the token’s price.
This is because the Solana token’s rally turned into a crab walk as soon as users started mass launching meme tokens on Pump.fun, according to popular crypto trader and podcast host Luke Martin.
The trader wrote in a Sept. 4 X post:
“When you overlay Pump.fun launches on top of the Solana price chart. $SOL stopped going up almost exactly when people started launching tons of memecoins.”
SOL price and Pump.fun memecoin launches. Source: Luke Martin
However, Solana’s price also remains highly correlated to Bitcoin’s (BTC) price, which could be another explanation for its crabwalk.
BTC&SOL, 3-month chart. Source: TradingView
Over the past three months, Bitcoin’s price fell nearly 18% while Solana’s price fell nearly 22%, according to Bitstamp data.
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Could a Solana ETF lift SOL from its price slump?
Solana could be the next major cryptocurrency to receive a spot exchange-traded fund (ETF) listing in the US, which could be a significant price catalyst.
Brazil’s first Solana ETF was approved on Aug. 7, setting a precedent for other global jurisdictions.
While a US Solana ETF remains uncertain, its unlikely prospect makes it a strong price catalyst, in case of a potential approval, according to Alejo Pinto, former IBM blockchain growth lead and founder of Solana layer-2 (L2) network Lumio.
Pinto told Cointelegraph:
“Since it is still very uncertain, an ETF approval in the US would have a positive price impact on Solana since the probability is low and therefore not yet priced in.”
21Shares files S-1 for Solana ETF. Source: Cointelegraph
Others are expecting a potential Solana ETF as soon as the end of 2024, including Manthan Dave, the co-founder of Palisade, a Ripple-backed digital asset custody platform. He said:
“Considering the current election season and the prevailing sentiment, it is likely that we will see the approval of Solana ETFs before the end of this year. The key question is whether this will happen before or after the elections.”
Solana To $1,000?! You Can’t Ignore These SOL Updates! Source: YouTube
ETFs can significantly bolster the price of the underlying cryptocurrency. For Bitcoin, spot ETFs accounted for about 75% of new investment in the token by Feb. 15 as it surpassed the $50,000 mark.
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This article first appeared at Cointelegraph.com News
