- Solana’s price has recovered from previous lows as bullish sentiment returns.
- Despite this recovery, evidence shows the rally will not last.
Solana (SOL), currently ranked the fifth-largest cryptocurrency, is on an upward trajectory, recovering from a sharp sell-off registered earlier in the week. Despite its bullish momentum, technical indicators and on-chain data hint at further price declines.
3 Factors Why SOL May 15%
The first factor suggesting Solana’s latest rebound may be short-lived is address activity. Data from The Block dashboard reveals that address activity on the Solana blockchain decreased in September for new and active addresses. Although address activity is still far above average for 2024, the recent drop points to decreasing investors’ demand.
The second factor is technical indicators on Solana price charts across several time frames.
As of this writing, SOL price was trading at $142.15, up by 4.5% in 24 hours. On the weekly time frame, SOL is down 9.6%.
Based on technical indicators, another double-digit decline seems likely for SOL due to price variations across different time frames. For instance, the Moving Average Convergence Divergence (MACD) indicator on the daily and 4-hour time frames shows underlying negative momentum in SOL’s price trend.
Since August, Solana has traded within a tight range on the daily chart, between $120 and $163. However, on August 5, Solana’s price dropped to a $110 low. SOL is presently trading close to $140, which is in the midpoint of the range. If SOL is corrected further, it could fall to the low range of $120, representing approximately a 15% drop.
Further price correction could also see SOL sweep liquidity at the August 5 low of $110. On the upside, SOL could move toward the psychologically important $160 level. However, this will depend on the asset seeing a daily candlestick close above Monday’s open at $158.
The third factor that may cause SOL to drop 15% of its value is Open Interest (OI). The OI is a key indicator that shows the total number of active positions in a specific contract. Traders use the metric to comprehend how money flows into and out of the market.
Coinglass data shows that Solana’s OI decreased by about 20% between September 30 and October 4. This suggests contracts are being closed, implying money is leaving the Solana market.
Key Solana Ecosystem Updates
A notable update in the Solana ecosystem is the expectations of the launch of an Exchange-Traded Fund (ETF) product. A potential SOL ETF approval would give institutional investors access to invest in the digital asset, and many expect this to send Solana’s price on bullish momentum.
Bloomberg ETF analyst Eric Balchunas noted that the approval of a SOL ETF depends on the results of the 2024 US Presidential Elections. In an earlier CNF post, the analyst approved for 2025 should Donald Trump win.
Another major update in the Solana ecosystem is an upcoming token unlock set for this month. As CNF mentioned earlier, Solana is preparing to unlock 524.03 million tokens worth $81.56 million, which, when unleashed, might increase the selloff scare.
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Source: https://www.crypto-news-flash.com/solana-price-correction-likely-3-factors-point-to-a-15-drop-in-sol/?utm_source=rss&utm_medium=rss&utm_campaign=solana-price-correction-likely-3-factors-point-to-a-15-drop-in-sol