Solana [SOL] finds favour on the charts, but is it too good to last

Solana’s blockchain is now perhaps accustomed to mishaps which seem to occur every once in a while. This week, there were reports that SOL addresses were hacked. However, investigations revealed that the exploit was external and not the network’s fault. Fortunately, the incident did not weigh heavily on SOL’s price action.

Now, although the latest incident did not trigger panic selling, SOL still saw some downside. The altcoin’s price dropped by roughly 16% from its end of July levels. This retracement seemed to be in line with the crypto-market’s performance over the same period.

Some breathing room for the bulls

SOL managed to record a 7% uptick over the last two days, confirming that it can still command healthy demand. The upside came after its price action almost came into contact with its ascending support line.

Source: TradingView

Despite its latest uptick, SOL investors should move cautiously. The latest rally has been characterized by low buying volume, and this explains the limited upside. On top of that, the recent downward pressure earlier in the week pushed it below its 50% RSI level. This underlined the weak upward price channel ever since SOL bottomed out.

Interestingly, SOL has also demonstrated resilience in resisting the downside. Its latest upside marked the second time that it has pivoted without significant interaction with the support line. Investors might have taken this as a bullish signal.

This would explain why the sentiment favoured the bulls in the last two days. The sentiment change was observed in the Binance funding rate and the DyDx exchange funding rate.

Source: Santiment

Solana developers have been quite active over the last two weeks as the development activity metric revealed. This may have been yet another reason why investor confidence improved slightly.

However, nothing attracts investors more than a healthy network, one that has strong activity and organic demand.

Source: Santiment

Solana saw strong growth in NFT trade volumes in July. While those volumes dropped significantly after mid-month, it maintained healthy levels nonetheless.

Conclusion

Although Solana bulls are currently in control, the price will abandon the current channel sooner or later. This will be equivalent to reshuffling the deck, which means the short-term outlook is still a toss-up.