Following Bitcoin’s drop toward the $60K level, the market experienced a slowdown, leading to a decrease in dominance among various altcoins. Last week, the market went on a correction due to a pivot from robust inflows into Bitcoin exchange-traded funds (ETFs) towards outflows. This change in direction contributed to Bitcoin’s decline, dragging altcoins down to their support levels in the process. Additionally, after SOL’s price lost the $200 mark, there was a noticeable drop in important on-chain metrics, raising concerns among long-term investors.
These Indicators Suggest A Bearish Outlook
In recent hours, the cryptocurrency market has entered a phase of recovery, with the price of Bitcoin climbing past $68K, which has helped to revive numerous altcoins. Over the last day, the market witnessed total liquidations surpassing $180 million, with sellers liquidating more than $114 million in positions. Notably, Solana saw a substantial short squeeze, resulting in almost $9 million in short positions being liquidated.
Despite its recent positive momentum, Solana faces potential challenges that could halt its progress, with bearish trends becoming apparent through on-chain data. Recent data indicates a significant decrease in demand for Solana as active addresses from 1.61 million to 1.33 million, pointing to a decline in user interaction. Furthermore, there has been a drop in the creation of new addresses on the Solana network, decreasing from 1.25 million to 1.01 million.
Additionally, a significant decrease in transaction fees for Solana has been observed, dropping from $4.83 million to just $2.07 million. This decline in fees might plunge investor interest, potentially increasing sellers’ dominance on the SOL price chart.
Since September 2023, Solana’s value has experienced a meteoric rise of over 1000%. This remarkable growth is mainly due to two key elements: the bullish trend of Bitcoin, with its price reaching $75K, and the substantial buying of SOL after FTX’s collapse. Just last month, Solana saw an impressive surge of 90%, recording the biggest increase of 2024.
What’s Next For SOL Price?
Currently, the market trends are favoring buyers, with investors aiming to surge above the $200 mark in the next few hours. However, sellers are vigorously defending against an upward price movement beyond the key Fibonacci retracement levels, leading to a notable increase in the volatility of the SOL price.
Should attempts to break above the $200 resistance level falter, the main line of support is expected to be the ascending trend line at $170. Breaching this support could lead SOL’s price to fall to a crucial level of support at $155 as seen on the 4-hour chart. A strong bounce back from the trend line might send the price towards the 20-day Exponential Moving Average (EMA). Clearing this barrier could establish a trading range of $190 to $210.
For the bulls to retain control over the market, it is essential to not only reach but also to maintain the price above the $200 mark.
