Solana has extended its downward trend, sliding to its lowest level since Aug. 19 and falling nearly 34% from its year-to-date high. The token is now on the verge of forming a death cross on its daily chart as outflows from spot Solana ETFs and the staking market rise — a sign that investors expect SOL to drop further in the near term.

Solana's Slump Mirrors Broader Market Weakness

SOL has been in a steep sell-off over the past two months, mirroring subdued action across the broader cryptocurrency industry. Larger peers, including Bitcoin, Ethereum and XRP, have also been in a downtrend — a shift widely described as the return of crypto winter.

The sell-off has coincided with weakness in the stock market, where top indices such as the Dow Jones and the Nasdaq 100 have declined over the past few months.

Solana's slump reflects the ongoing fear in the market. Data shows that the Crypto Fear and Greed Index, a widely followed sentiment gauge scored from zero to 100, has slumped to a reading of 25 — within the fear zone, a level at which cryptocurrencies have tended to underperform.

Death Cross Formation Underway

The daily chart shows the SOL token in a strong sell-off over the past few months and now close to forming a death cross. The pattern occurs when the 50-day moving average moves below the 200-day moving average, and it is in most cases considered one of the riskiest setups in technical analysis. Because it relies on backward-looking moving averages, the signal typically confirms a downtrend already in progress rather than predicting what comes next.

The token has also dropped below the 61.8% Fibonacci retracement level of $84.7 — one of the ratios traders watch to gauge how much of a prior move has been retraced. Assets that break below that retracement level have in many cases gone on to decline further.

Momentum indicators point in the same direction. The Average Directional Index (ADX) has continued rising and currently stands at 38.26, its highest level since Oct. 9. An ADX reading of 20 or above is usually a sign that a trend is accelerating.

Taken together, these readings suggest the path of least resistance for the token is to the downside, with the next key level to watch at $73 — the 78.6% retracement level. A move to that level would represent a decline of about 10% from the current price.

Spot Solana ETF Outflows Are Rising

Solana's fundamentals have deteriorated in recent months, with sustained outflows from spot SOL exchange-traded funds among the most prominent examples. Data from SoSoValue shows that spot Solana ETFs shed more than $32.10 million in assets this month, after losing an additional $143 million last month.

The funds have recorded cumulative net inflows of $1.44 billion and currently hold $1.21 billion in assets under management. The largest are funds operated by Bitwise, Fidelity, Grayscale and Morgan Stanley.

Sustained ETF outflows signal that demand among institutional investors is waning. Because those investors typically hold a long-term view, such a shift has in many cases led to additional selling pressure. Until those flows stabilize, ETF activity will remain one of the most direct, real-time gauges of institutional appetite for SOL.

Staking Market Cools as Alameda and FTX Addresses Unstake SOL

The same trend is playing out in staking. Data from StakingRewards shows that Solana's staking market capitalization has dropped 13.50% in the last few days to $35 billion, while the staking ratio — the share of SOL supply committed to the network — has fallen from 70% a few months ago to the current 68%.

One reason is that addresses linked to FTX, the exchange that collapsed in late 2022, and its affiliated trading firm Alameda Research have unstaked 204,000 SOL tokens — a move viewed as a sign that they plan to sell.

Solana's demand has also weakened in the spot and futures markets. The volume of all Solana tokens in the spot market dropped 30% over the past 24 hours to $2.13 billion. Futures open interest, meanwhile, has been falling, a further sign that demand remains weak. How these flows develop over the coming sessions will be one measure of whether selling pressure persists.