As the broader cryptocurrency market grapples with a significant correction, the spotlight shifts to Solana (SOL) and its recent performance. With Bitcoin faltering beneath the $58,000 support level, the altcoin market is facing heightened supply pressures. Solana, in particular, has seen its price tumble below the $130 threshold. But the question remains: will this decline push Solana under the critical $110 mark?
Solana’s Recent Downfall
In the midst of this correction, Solana has experienced a troubling downtrend, marked by eight consecutive bearish candles. This streak represents a substantial 20% price drop. As of today, the SOL price has dipped by 0.39%, setting the stage for a potential ninth consecutive bearish candle if current trends persist.
On the 4-hour chart, Solana’s decline has created a resistance trend line. However, the formation of lower lows has led to a bullish divergence in the 4-hour Relative Strength Index (RSI) line. This divergence hints at the possibility of a bullish reversal challenging the overhead resistance.
Yet, the bearish pressure remains palpable, as evidenced by a death cross in the 50 and 200 Exponential Moving Averages (EMAs) on the 4-hour chart. This technical pattern, typically a bearish signal, indicates that Solana’s short-term outlook might be grim.
Declining On-Chain and DEX Volumes
The bear market has taken a toll on Solana’s network activity. On-chain volumes have dropped dramatically, hitting some of the lowest levels in the network’s history. For comparison, Solana’s on-chain volumes were significantly higher when SOL traded below $20.
Recent data from DeFiLlama reveals that decentralized exchange (DEX) volumes on Solana have shrunk by 19% over the past week, falling to $539 million. This marks an alarming decline from the over $3.8 billion in daily DEX volume recorded at the beginning of March 2024, representing a staggering 87% drop. The total on-chain volume has similarly decreased to $6 billion, underscoring the network’s current difficulties.
What’s Next for Solana?
Analyzing Fibonacci retracement levels from the early August correction, Solana appears to be heading towards the 23.60% Fibonacci level at $125. The next significant support levels are at $115 and $110, which could act as crucial thresholds.
Also Read: Solana Price Slides as Whales Unload 139,000 SOL – Is a Bearish Storm Brewing?
Conversely, if Solana manages to trigger a bullish cycle, resistance levels at the 38.20% and 50% Fibonacci levels, around $136 and $145 respectively, could come into play. However, the declining 50 EMA could present additional resistance in the interim.
In conclusion, as Solana navigates this turbulent phase, its ability to hold above the $110 mark remains uncertain. Market participants and analysts alike will be watching closely to see if the altcoin can reverse its downward trajectory or if it will succumb to the broader market pressures and fall further.
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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