Solana, the 7th-largest cryptocurrency by market capitalization, has fallen more than 7% over the past 24 hours.
SOL, the network's native token, is currently trading at just over $115, according to data pulled from CoinMarketCap.
Solana is a smart contract-enabled blockchain network meaning it can host various non-fungible token (NFT) and decentralized finance (DeFi) projects.
It also uses a proof-of-stake (PoS) consensus mechanism to secure the network. Instead of needing crypto-specific mining machines, networks that use PoS are secured by validators who have staked the network's native currency.
In terms of adoption, Solana is growing quickly. For example, it ranks fifth among the networks with the most DeFi activity after Avalanche, BNB Chain (formerly Binance Smart Chain), Terra, and the market leader Ethereum.
Of the total $223 billion locked in various projects across the ecosystem, Solana commands a market share of just 3.35%, according to DeFi Llama. For context, Ethereum enjoys more than 54% of the market.
Today's price action has likely been stirred by broader market fears that the Federal Reserve is eyeing additional interest rate hikes.
The key reason for such an aggressive stance? Fighting inflation.
"It is of paramount importance to get inflation down," said Federal Reserve Governor Lael Brainard in minutes released on Wednesday. "Accordingly, the committee will continue tightening monetary policy methodically through a series of interest-rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting."
Unpacking Solana liquidations
During bouts of high volatility like those experienced yesterday, liquidations are common. But given how leveraged crypto-specific speculators can be, these liquidations often turn into cascades, pulling prices down even further than expected.
Data from CoinGlass, a service that monitors liquidation activity across the crypto market, reported $356.47 million in closed crypto positions.
Of that sum, Bitcoin made up roughly $92.62 million, Ethereum liquidated $64.96 million, and Solana made up $27.04 million over the past 24 hours.
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