Why is Solana (Sol) lowering prices today?

Solana's native token Sol fell nearly 12.75% in the last 24 hours to a three-week low of $112.50 on April 3rd.

The main drivers behind Sol's sharp correction are:

The latest tariffs from the Trump administration and the possibility of eliminating trillions of dollars from the stock market.

Negative solvency base and funding rate.

Multiple technical factors.

Let's explore these catalysts in detail.

Trump tariffs on Rattle Solana and the broader crypto market

Solana's decline came as a result of US President Donald Trump's “liberation day” tariffs on April 2. Escalating trade tensions led investors to move away from riskier assets, including cryptocurrencies such as Sol, and support safer investments.

Related: Trump's “liberation day” tariffs cause disruption in the market, recession concerns

Sol's recent price decline is closely linked to fading demand in the futures market, as reflected by the sharp decline in annual rolling bases on the three-month contract.

Annual rolling base indicates that more (or less) futures contracts are traded compared to current spot prices, expressed as an annual percentage.

A high foundation means that the future is trading at a critical premium. A low or negative base, on the other hand, means that futures are trading near or below the spot price.

The Sol Futures base peaked at 18% in mid-November 2024, and was below 0% as of April 3, indicating that traders are not paying Sol's premiums.

Solana's funding rate is negative

The price decline in Solana is further coincided with a decline in funding rates, indicating a weaker bullish momentum in the market.

Sol's weekly funding rate fell from 0.14% to -0.0462 on April 3rd from one day ago. This negative funding means that short traders are paying the longs, highlighting expectations for further downsides.

Currently, Sol's daily charts show patterns of continuity of the bear flag. This is a process that encourages successive bearish structures as prices go down.

As of April 3, Sol was trading below the low flag pattern trendline, predicting a price decline at $96.

This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.