As Bitcoin broke below the $97,000 support level, Solana (SOL) followed suit, losing its psychological support at $200. This dip has sparked concerns of a deeper correction, yet the technical indicators hint at a potential rally if the broader market stabilizes. So, should investors consider purchasing Solana at discounted prices in hopes of a breakout?
Falling Channel Pattern Signals Bearish Pressure
In the 4-hour price chart, Solana has formed a falling channel pattern. The price has dropped by 35% over the past three weeks, sliding from a swing high of $295 to its current market price of $193.53. The recent bearish move saw the price breach the 23.6% Fibonacci retracement level, breaking through the key $200 mark, which had acted as psychological support for Solana.
Despite this downward trend, there are glimmers of hope. The 4-hour Relative Strength Index (RSI) shows a bullish divergence, signaling that a positive reversal could be in the cards. Additionally, the MACD indicator is nearing a positive crossover, reinforcing the potential for a price bounce if market conditions improve.
Solana ETF Approval on the Horizon?
On the bullish side, speculation around a potential Solana ETF approval in 2025 adds optimism to the narrative. PolyMarket users have placed an 84% chance on the approval, which could bring substantial liquidity to Solana’s market. Such a development would likely have a significant positive impact on Solana’s price, providing much-needed momentum.
Bearish Risks: PumpFun’s Supply Surge
Despite these bullish indicators, supply surges from entities like PumpFun pose a risk to Solana’s price action. PumpFun recently deposited 114,285 SOL tokens to Kraken, contributing to a significant increase in available supply. If PumpFun continues to unload its holdings, it could weigh heavily on Solana’s price momentum, adding bearish pressure to the market.
Also Read: Altcoin ETFs Near Approval: Litecoin, Dogecoin, Solana, and XRP Poised for SEC Green Light
Solana’s next target is the 23.6% Fibonacci level at $196.48. If it successfully reclaims this level, it could push towards $200 and challenge the 38.2% Fibonacci level at $211. A market-wide recovery could potentially fuel a breakout towards $250, but a continued bearish trend could drag SOL down to the $175 support level. Investors should remain vigilant as Solana navigates this critical phase.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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