By Chris Hollingworth 
Solana’s native token, SOL, experienced a significant drop of nearly 12.75% in the past 24 hours, reaching a three-week low of $112.50 on April 3.
A combination of factors contributed to SOL’s sharp correction:
- The latest round of tariffs announced by the Trump administration, which raised concerns about potential impacts on the stock market.
- Negative SOL futures basis and declining funding rates.
- Various technical factors affecting market sentiment.
The decline in SOL came following US President Donald Trump’s announcement of “Liberation Day” tariffs on April 2. This escalation in trade tensions prompted investors to shift away from riskier assets like cryptocurrencies, including SOL, towards safer investment options.
One key indicator of weakening demand in SOL’s futures market is the significant drop in the annualized rolling basis on three-month contracts. The annualized rolling basis reflects the difference in trading between futures contracts and the current spot price, expressed as an annual percentage.
The decline in SOL’s futures basis, which peaked in mid-November 2024, indicates a shift in market sentiment from bullish to bearish, with traders no longer willing to pay a premium for SOL.
Additionally, SOL’s funding rates turned negative, suggesting a decrease in bullish momentum and highlighting the potential for further downside in the market. The weekly funding rates for SOL slipped to -0.0462 on April 3, down from 0.14% the previous day.
Technically, SOL’s daily chart exhibits a bear flag continuation pattern, indicating a bearish trend confirmation that could potentially drive prices lower. As of April 3, SOL was trading below the lower trendline of the flag pattern, with a projected price decline to $96.
It’s important to note that this article does not offer investment advice. All trading and investment decisions carry inherent risks, and readers are encouraged to conduct their own research and analysis before making any financial decisions.
