Key takeaways:
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SOL retail leveraged longs who entered Monday’s range high were partially flushed out on today’s sell-off to $205.
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Despite the brief downturn, institutional investor-sized entities bought the SOL price dip.
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The risk of a US government shutdown is the main culprit in the sell-off, but traders remain focused on the Oct. 10 SEC Solana ETF deadline.
SOL (SOL) price abruptly fell to $204.17 on Tuesday as US stock markets sold off on the news that the US government is on track to shut down starting Oct. 1 after Democrats and Republicans failed to secure an agreement to fund the nation.
Despite the negative news headlines and rancour among opposing political parties, the DOW, S&P 500, Nasdaq and Russell 200 finished the trading day in the black, with the DOW achieving another record high.
Par for the course, crypto markets followed in the stock markets’ footsteps, with Bitcoin (BTC) rebounding from an intra-day low of $112,656 to $114,400 at the time of writing. Most altcoins have yet to regain their Monday highs, but the reversal in BTC and stocks appears to have at least arrested the decline in large and small-cap cryptocurrencies.
SOL is still down 1.38% for the day, but has recaptured its median range from the weekly open, to currently trade above $209.50. Data from Hyblock shows retail traders bearing the brunt of the flush out, while the institutional-investor size cohort (1 million to 10 million anchored CVD) shows larger entities stepping in to buy the decline.
Related: Pro Bitcoin traders’ view on BTC’s flash crash to $112.6K: Did anything change?
Charts suggest that late leveraged retail longs were liquidated on the move down to $205, but retail and pro day traders viewed the resulting negative funding rate as an opportunity to open fresh spot and leveraged longs.
Beyond the knee-jerk reaction to the increasing chance of a US government shutdown, Bitcoin and SOL traders have chosen to focus on the numerous positive catalysts present across the crypto market.
Bitcoin traders remain focused on the anticipated trio of upcoming Federal Reserve interest rate cuts and a Trump-friendly Fed chair eventually being appointed. On the other hand, SOL traders expect the rising tide that is Bitcoin to lift all altcoins, and have kept their sights set on the US Securities and Exchange Commission’s Oct. 10 deadline to render a decision on the fate of numerous spot SOL ETFs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
