Solana price eyes rebound from $90 support as stablecoin supply hits record high

Solana price fell 4% on Wednesday, moving closer towards the $90 support amid a broader market downturn triggered by hotter than expected U.S. PPI data.

According to data from crypto.news, Solana (SOL) price fell to an intraday low of $90.4, bringing its market cap lower to $51.6 billion.

The 7th largest crypto asset by market capitalization slipped after the U.S. Bureau of Labor Statistics revealed data that showed hotter than expected inflation at the producer level. Notably, PPI rose by 0.6% in February while core PPI climbed 0.3%, both figures overshooting economist forecasts and signaling persistent inflationary pressures.

The data comes just ahead of the Federal Reserve rate cut decision scheduled for 2:30 P.M. today, where the market largely expects the Fed to hold interest rates steady. Odds of a pause are as high as 99% on the CME Fed Watch tool.

The Fed is also likely to delay any rate cuts this year, especially with surging oil prices which came as a result of a blockade at the Strait of Hormuz amid the U.S.-Iran war.

Despite the bearish market scenario, there remains a few key fundamental metrics that could support Solana price action. Notably, the total stablecoin supply on the Solana network hit a record high of around $15.7 billion earlier this week.

A strong stablecoin supply means there is significant sidelined capital ready to buy the dip and often precedes a period of high liquidity and buying pressure.

Adding to this, spot Solana ETFs have continued to record back-to-back inflows for the sixth straight week, drawing in over $127 million in the funds.

Solana price analysis

On the daily chart, Solana price has respected an ascending trendline that has been serving as a dynamic support since early February this year.

Technical indicators like the MACD lines have pointed upwards, while the Aroon Up at 85.71% stood significantly higher above the Aroon Down.

Hence, Solana price could rebound back above the $90 support even if it were to drop temporarily due to the ongoing market downtrend observed at press time. 

However, a drop below $80, the next key psychological support level, could invalidate the current bullish structure and lead to a deeper correction.

At press time, SOL price was trading at $89, down over 5% on the day.