Why is Solana (SOL) price down today?

olana price is down over 20% from its recent highs and the downtrend may continue into January 2024.
Solana 

 is witnessing a price correction after rallying over 100% in December. SOL's decline appears to be the result of profit-taking and capital rotation into Ethereum's ETH $2,353

 token.Overbought correction

On Dec. 28, SOL's price has fallen to $101.50, three days after reaching $126.50, the highest level since April 2022.
It is evident that traders have started booking profits after Solana's latest price rally. One indicator suggesting this is SOL's daily relative strength index (RSI), which crossed above 70, or "overbought" earlier in December.
SOL/USD daily price chart. Source: TradingView
For instance, Solana's richest investors have recently started selling their SOL holdings. On Dec. 28, just around Solana's 5% daily drop, someone deposited 303,756 SOL worth $32.8 million to Binance, potentially boosting sell-side pressure.

Solana's top rival gains momentum

Solana's price drop today coincides with gains for its top layer-one (L1) blockchain rival, Ethereum.
Related: Why is Solana (SOL) price up this week?
Notably, ETH price has climbed 12.35% to around $2,450 during SOL's price correction. As a result, the SOL/ETH pair has plunged 23.75% this week, suggesting capital rotation from SOL to ETH.
SOL/ETH daily price chart. Source: TradingView

Solana TVL drops by 2M

SOL's price drop on Dec. 28 follows a period of decline in the total-value-locked (TVL) across the Solana dapps ecosystem.
Notably, Solana's TVL has dropped by 2 million SOL (~$200 million) since Dec. 20, according to DeFi Llama. Less SOL locked in Solana's applications means more supply elsewhere, including crypto exchanges, which can also increase sell-pressure on the market.
Solana TVL performance chart. Source: Defi Llama

Solana price analysis

Solana price technicals suggest SOL/USD is overbought even on larger-timeframe charts, raising the possibility of a correction or consolidation period in January.
SOL/USD weekly price chart. Source: TradingView
The bears will attempt to close the price below its 0.382 Fibonacci line support near $100, opening the door for the next big support level at the 0.236 Fibonacci line ($68.5), down 35% from current levels.
Conversely, the bulls will aim for a decisive weekly (and yearly) close above the 0.5 Fib line near near $130. Flipping this level into support could propel SOL price to $150 by February.