Solana (SOL/USD) price retreated to the lowest point since April 27th as concerns about Bitcoin and Ethereum congestion continued. The coin plunged to a low of $21, which was much lower than the year-to-date high of $27.13.
Bitcoin and Ethereum congestion
The biggest cryptocurrency news story on Monday was that congestion among Bitcoin and Ethereum continued. As a result, Binance announced that it had temporarily paused withdrawals of Bitcoin as the team handled the situation.
Bitcoin’s network fees have therefore soared. On-chain data shows that the total fees in Bitcoin surged to 6.13 BTC. Including subsidies, the fees have jumped to 12.38 BTC. It is unclear why this happened. However, data further data from Binance showed that the largest Bitcoin withdrawal on record happened during the weekend.
A BTC holder withdrew 162,000 BTC valued at over $4.5 billion. Meanwhile, data compiled by DeFi Llama shows that Binance had outflows valued at over $293 million in the past 24 hours.
All these developments are positive for Solana, a blockchain that is known for its speed and low transaction costs. While Bitcoin has over 400k transactions and Ethereum has over 200k transactions pending, Solana has zero. This could be a positive catalyst for Solana prices as demand rises.
Meanwhile, the total value locked (TVL) in Solana has crawled back in the past few months. It stands at 47 million SOL, the highest point since December. It started the year at 25 million SOL. This happened as the number of active users jumped to over 200k, which was higher than the year-to-date low of about 100k.
Solana price prediction
SOL chart by TradingView
The 4H chart shows that the SOL price has lost the momentum it had a few months ago. It has already slipped by more than 20% from the highest point in March. This means it has moved into a bear market. The coin has moved below the 25-day and 50-day exponential moving averages.
Notably, Solana has retested the ascending trendline that connects the lowest levels since March 15. Solana price has also formed a head and shoulders pattern. Therefore, from a technical perspective, the outlook remains a bit bearish, with the next key support to watch being at $20. A move above the right shoulder at $23 will invalidate the bearish view.
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