Despite a dip in on-chain activity, Solana (SOL) has defied expectations by surging 10% in the past 24 hours. This unexpected price increase has sparked a wave of liquidations among sellers, with Coinglass data revealing $13.2 million in SOL liquidations, predominantly from short positions. However, the decline in new and active addresses on the Solana blockchain raises concerns about the sustainability of this upward trend. As SOL approaches critical resistance levels, investors are keenly watching to see if the bulls can maintain their momentum or if the bears will regain control. Can Solana continue its ascent amidst these challenges?
Challenges Facing Solana’s Recovery: Analysis and Projections
In the past 24 hours, SOL witnessed a significant price increase, triggering a wave of liquidations by sellers. Coinglass data indicates $13.2 million in SOL liquidations, with $9.5 million from short positions. Meanwhile, The Block’s dashboard reveals a notable decrease in new addresses on the Solana blockchain, dropping by 14.7% over the past 15 days from a weekly high of 915,000 to 780,000.
A robust influx of new addresses typically signals healthy network growth and increased utility, positively affecting Solana’s value. Conversely, the current slowdown in new addresses raises concerns among investors about potential issues such as reduced blockchain appeal, technical challenges, or competition from other platforms. This trend may hinder SOL’s ongoing recovery efforts.
Furthermore, the decrease in active addresses on the Solana blockchain, from 1.21 million to 1.1 million, adversely affects SOL’s price. Reduced user engagement and transaction activity weaken investor confidence, potentially dampening demand for SOL. Analysts anticipate SOL’s recovery to stall as it encounters resistance channels without adequate buying pressure, potentially leading to a reversal for Solana.
Solana Price Analysis: Bulls and Bears in Battle
Bulls Dominating Market, Eyeing Crucial Resistance
The inability of bears to stop a rebound at $120 for Solana suggests continued dominance by bulls. Breaking above immediate Fibonacci channels, bulls are driving the SOL price toward its crucial resistance near the 200-day EMA at $150. However, sellers are expected to strongly defend against a surge above this trend line. Currently, SOL is trading at $138, showing an impressive surge of over 11% in the last 24 hours.
Bearish Outlook and Support Levels
On the bearish side, there’s slight support at $116-$120. However, if this threshold is breached, selling pressure may intensify, potentially pushing the SOL/USDT pair down to $100. A deeper drop could further delay the onset of the next upward trend.
Bulls’ Path to Regain Momentum
For bulls to regain momentum, they need to swiftly propel the price above the 200-day EMA, currently at $150. This move could catch aggressive bears off guard, possibly triggering a short squeeze. Subsequently, the pair might target the 50-day SMA at $166.
Solana’s Market Dynamics and Future Projections
The Impact of Reduced On-Chain Activity
The decline in new and active addresses on the Solana blockchain is a critical factor that could influence SOL’s future price movements. A decrease in on-chain activity often signals reduced interest and engagement from users, which can negatively impact the network’s overall health and utility. This reduction in activity could be attributed to several factors, including increased competition from other blockchain platforms, technical issues, or a general decline in market interest.
Potential for Recovery and Growth
Despite these challenges, Solana has shown resilience in the past. The network’s ability to handle high transaction volumes and its growing ecosystem of decentralized applications (dApps) and decentralized finance (DeFi) projects are strong indicators of its potential for recovery and growth. If Solana can address the current issues and attract more users and developers to its platform, it could see a resurgence in on-chain activity and a subsequent increase in SOL’s price.
Key Resistance and Support Levels to Watch
Investors should keep a close eye on key resistance and support levels in the coming days. The $150 resistance level, marked by the 200-day EMA, is a critical point that could determine the future direction of SOL’s price. If bulls can push the price above this level, it could trigger a significant upward movement, potentially targeting the 50-day SMA at $166. On the other hand, if the price falls below the $116-$120 support range, it could lead to increased selling pressure and a further decline in SOL’s price.
Conclusion: Can Solana Sustain Its Upward Trend?
Solana’s recent price surge amidst declining on-chain activity presents a mixed outlook for the cryptocurrency. While the current price increase is a positive sign, the underlying issues related to reduced user engagement and transaction activity cannot be ignored. For Solana to sustain its upward trend, it will need to address these challenges and demonstrate its ability to attract and retain users and developers.
Investors should closely monitor key resistance and support levels, as well as any developments related to Solana’s network activity and ecosystem growth. By staying informed and vigilant, investors can make more informed decisions and better navigate the volatile cryptocurrency market.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
Additional Insights and Related Articles
Solana (SOL) Surges as Market Recovers
Following a short-term market correction, Solana (SOL) is making waves in the recovery week, standing out as one of the top performers in the cryptocurrency segment. What are the long-term expectations for Solana, a leading smart contract platform?
SOL’s $200 Target
With increasing demand in the altcoin segment, the fifth-largest altcoin is valued well above $80 billion. Following this recovery, experts believe that the SOL price could be gearing up for a bull run beyond $200. The weekly chart shows an uptrend in SOL price, indicating a significant reversal of the trend. As the market grows, the altcoin’s weekly returns and trend momentum are also increasing.
This week, with a 25% increase, the Solana price is not only approaching the psychological mark of $200 but also ready to challenge the 78.60% Fibonacci level. Additionally, the weekly chart may show the third consecutive rising candlestick, reflecting a high-momentum upward trend. According to cryptocurrency analysts, Solana, which has recorded an increase of over 1000% in 180 days, could be preparing for an impressive comeback story.
Resistance Levels in Solana
Considering that the upward trend is expected to continue into 2024, the rapidly rising prices could easily surpass $250. Currently, the SOL price is trading at $186, up 2.35% for the day, which could signify a positive continuation. As the leading cryptocurrency Bitcoin reclaims $70,000, a market recovery could lead to momentum gains for altcoins.
According to Fibonacci levels, the recovery in Solana’s price could extend the bull run and quickly surpass the $200 mark. If the bull run continues, the $200 level could easily lift the altcoin’s market value to $250, potentially leading to an all-time
