The Solana network is having trouble keeping up with on-chain activity as trading interest declines. Following a recent market crash, SOL’s price corrected and approached support levels.
Although SOL’s price recovered afterward, the ongoing low on-chain data is worrying investors about whether this upward trend can be sustained.
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.
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