What Solana did after foundation argued SOL’s ‘security’ label

• The brains behind the project did not agree with the security tag of its token.
• While the price increased, traders opted for pessimism.

Solana [SOL] Foundation has responded to the classification of the project’s native token as a security. In its 10 June official reply, the foundation sparingly argued that the blockchain’s mission was to build exceptional products, further highlighting how it was surprised that the U.S. regulator mentioned the token.

The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs across the U.S. building in the…

— Solana Foundation (@SolanaFndn) June 10, 2023

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Recall that debates erupted from the crypto community regarding the SEC’s decisions to label some of the top tokens as unregistered securities. 

However, the foundation noted that it was not in its place to go into a brawl with the SEC. Instead, it noted that it was ready to engage the agency to provide regulatory clarity on operating in the country. Solana Foundation said, 

“We welcome the continued engagement of policymakers as constructive partners in regulation to achieve legal clarity on these issues”

Following the response, SOL experienced a turnaround. And according to CoinMarketCap, the token value surged by 6.16% in the last 24 hours. This suggests that investors might be undeterred by regulatory concerns. 

Before the recent recovery, SOL’s price initially decreased by 22% on account of the proscription. But based on the SOL/USD four-hour chart, buyers have been influential in pushing up the price.

At press time, bulls were able to regain confidence by building support at $15.29. This continuous buy pressure led the SOL price to exchange hands at $15.62.

Although the Relative Strength Index at 32.94 suggests proximity to bearish momentum, it still depicts a recovery from the 14.56 value on 10 July. However, if SOL was to edge higher than its current price, it would require additional buying pressure.

Source: TradingView

Shorts are not impressed

In the derivatives market, traders haven’t yet swayed from open short contracts on SOL. According to Coinglass, the SOL funding rate was down to -0.039%.

Typically, when the funding rate is positive, it means the perpetual price is higher than the spot price. Thus, long-positioned traders would be willing shorts to keep their positions open.

But since SOL’s funding rate was negative, then it means that more shorts paid longs to hold their position. 

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Despite the SOL uptick, the weighted sentiment remained in the negative region. For context, the sentiment describes the social volume linked to texts, either optimistic or otherwise about an asset.

Source: Santiment

When the weighted sentiment is up, it means that the average perception around a token is in favor of a price increase. Therefore, SOL’s position infers that the sentiment toward the token had not yet changed from the period it lost a chunk of its value.