The Solana (SOL) token is one of the biggest losers on the crypto market with a price drop of around 30% in the last seven days. After the US Securities and Exchange Commission (SEC) declared the Solana token as well as numerous other altcoins as securities in its lawsuits against Coinbase and Binance US, the SOL price plummeted.

In a worst-case scenario, the SEC could sue Solana Foundation in the same way it did Ripple Labs in December 2020. Thus, the bottom of the SOL price’s slump might not be reached yet, if the SEC really takes this step and thus causes more investors to panic sell.

Solana Community And Developers Oppose The SEC

The Solana Foundation has now responded to the SEC’s classification of its SOL token as an unregistered security. In a statement, it said, “The Solana Foundation strongly believes that SOL is not a security,” adding “SOL is the native token to the Solana blockchain, a robust, open-source, community-based software project that relies on decentralized user and developer engagement to expand and evolve.”

While one developer at a recent event dismissed the SEC’s legal action, stating that developers “give a shit” about what the SEC thinks, there is a part of the community that is already thinking about possible ways to solve the SEC issue.

The founder of Degen Picks launched a poll within the Solana community on whether the blockchain should fork to avoid the regulatory issues with the SEC. A total of 2,050 people participated in the poll, 39.9% answered “yup” while 24.2% answered “stfu” (shut the fuck up).

OK hear me out. It’s time to fork $SOL. SEC dissapears, FTX bankruptcy can dump on themselves. $BTC and $ETH both did it.

cc @SOLBigBrain

Your reaction?

— Caps² (@capsjpeg) June 10, 2023

Surprisingly, the idea is supported by Abracadabra founder @HGEABC. Via Twitter, he responded to the poll, writing, “Bold but not a bad idea actually. Community fork Solana will get rid of SEC issue. No bankruptcy will dump on you for next 3 years continuously. ETH is a fork of ETC and doing well. Blink twice if you agree.”

A user then asked the Abracadabra founder if he could get Solana Labs co-founder Anatoly Yakovenko and his team to work on the fork. The Abracadabra founder speculated that they “probably will” if they are sued by the SEC. “Then work on the fork save their own problem too.” Remarkably, the Solana Foundation has not yet responded to the poll.

Overall, however, there are mixed opinions in the community about the fork. It’s also worth noting that proponents don’t have a specific plan for a fork yet.

Nevertheless, according to the founder of Degen Picks, a fork could not only solve the SEC problem, but also FTX bankruptcy. A copy of the Solana chain could be given a new set of rules and parameters. The FTX wallets could be blacklisted and not receive the new token.

SOL Price Keeps Falling

At press time, the SOL price was trading at $15.15. The 1-day chart shows the dicey situation for the SOL price. The bulls need to defend the $12.82 level at all costs to prevent a fall to the December 2022 low at $8.02.

To the upside, the $16.00 level is the key resistance for now. With an RSI of 26.2, SOL is in oversold territory and could initiate a recovery.

Featured image from Analytics Insight, chart from TradingView.com

Binance.US, the US arm of the cryptocurrency exchange Binance, has suspended trading for several crypto pairs and reduced its supported convert trading pairs following a lawsuit filed by the US Securities and Exchange Commission (SEC) against Binance entities and their leadership. The move is seen as a precautionary measure to address potential securities concerns raised by the SEC.

This move came after the SEC filed a lawsuit against Binance on June 5, accusing the exchange of offering unregistered securities. The charges include unregistered offers and sales of BNB and BUSD tokens, as well as various products and programs offered by Binance. Similarly, Coinbase, another popular cryptocurrency exchange, was also targeted by the SEC in a separate lawsuit, alleging the offering of securities in the form of certain cryptocurrencies like SOL, MATIC, and The Sandbox.

Binance.US announced that it would remove certain selected advanced trading pairs on June 8, 2023, and has also paused its Over-The-Counter (OTC) Trading Portal. Over 90 trading pairs of the stablecoin Tether (USDT), eight Bitcoin (BTC) pairs, and two Binance USD (BUSD) pairs are affected by this suspension. However, deposits and withdrawals remain available on the platform.

A spokesperson for Tether suggested that the decision to halt trading for non-USDT tokens could be a preemptive move considering the possibility that these tokens listed on the exchange might be considered securities by the SEC.

Furthermore, Binance.US has reduced the number of supported convert trading pairs and limited options to buy, sell, and convert only a select few cryptocurrencies, including USDT, USD Coin (USDC), BNB, Ether (ETH), BTC, and others. The exchange has also updated the maximum trade amount for these options to $10,000.

Additionally, Binance.US temporarily shut down its OTC trading platform, but there is no information available regarding when it will resume operations.

Binance’s efforts to improve transparency of its reserves have recently exposed red flags in the crypto exchange’s finances. The Wall Street Journal recently headlined with an article stating that Binance is trying to calm investors, but that its finances remain a mystery.

According to a former Financial Accounting Standards Board (FASB) member and investment manager, a report released by the audit firm Mazars did not bring any tranparency in the matter. It said that information related to the quality of internal controls and how Binance’s systems liquidate assets to cover margin loans was not there.

The report also reported a lack of information about Binance’s corporate structure. It mentioned that Binance’s chief strategy officer, Patrick Hillmann, was unable name Binance’s parent company. Binance has been going through a corporate reorganization for almost two years now.

Both Binance and Coinbase are now facing regulatory challenges, and the outcomes of these lawsuits may have significant implications for the crypto industry.

Mona el isa, formerly of Goldman Sachs, and founder of Avantgarde, one of the world’s-first institutional-grade DeFi companies, has commented on the lack of transparency and proof of reserves in centralized crypto companies like Binance. She points out that these companies do not provide meaningful proof of their asset custodianship practices, which requires implicit trust from users. According to El Isa, if there was more transparency regarding custody, the market could better differentiate between good and bad practices, allowing for effective monitoring and mitigating potential issues.

El Isa argues that decentralized, transparent on-chain funds, commonly found in decentralized finance (DeFi), could be more secure than opaque centralized finance (CeFi) funds. DeFi offers 24/7 auditable transparency, eliminating the need for trust. This viewpoint is in line with her drive to establish Enzyme, which she co-founded. Enzyme is a platform designed to automate and bring transparency to traditional asset management, aiming to create an asset management experience that empowers users through non-custodial interactions, on-chain reporting for transparency, and enforceable and automatable risk management within decentralized governance frameworks.

Solana gained bearish momentum and traded below $20 against the US Dollar. SOL price might now struggle to recover above the $20 and $21 resistance levels.

• SOL price is showing bearish signs below the $20.50 resistance against the US Dollar.
• The price is now trading below $19.80 and the 100 simple moving average (4 hours).
• There is a major bearish trend line forming with resistance near $19.90 on the 4-hour chart of the SOL/USD pair (data source from Kraken).
• The pair could recover but upsides might be limited above $20.

Solana Price Extends Losses

This past week, Solana’s price started a fresh decline from well above $21. SOL gained bearish momentum and was able to trade below the $20.50 support.

The bears gained strength and pushed the price below the $20 support. The price is now showing bearish signs below $20, similar to Bitcoin and Ethereum. A low is formed near $18.70 and the price is now consolidating losses.

SOL is now trading below $19.80 and the 100 simple moving average (4 hours). There is also a major bearish trend line forming with resistance near $19.90 on the 4-hour chart of the SOL/USD pair. On the upside, immediate resistance is near the $19.80 level and the trend line.

The next major resistance is near the $20 zone or the 50% Fib retracement level of the downward move from the $21.51 swing high to the $18.70 low. The main resistance is now forming near the $20.50 level and the 100 simple moving average (4 hours).

Source: SOLUSD on TradingView.com

The 61.8% Fib retracement level of the downward move from the $21.51 swing high to the $18.70 low is also near $20.50. A close above the $20.50 level could resend the price toward the $21.50 resistance zone. Any more gains might send the price toward the $22 level.

More Losses in SOL?

If SOL fails to clear the $20.50 resistance, it could continue to move down. Initial support on the downside is near the $19.00 level.

The first major support is near the $18.80 level, below which the bears might gain strength. In the stated case, Solana price may perhaps decline toward the $18.20 support. The next major support is near the $17.50 level.

Technical Indicators

4-Hours MACD – The MACD for SOL/USD is gaining pace in the bearish zone.

4-Hours RSI (Relative Strength Index) – The RSI for SOL/USD is below the 50 level.

Major Support Levels – $18.80, and $18.20.

Major Resistance Levels – $20.00, $20.50, and $21.50.