Solana (SOL) shows early signs of stabilization after a sharp market decline. Over the past seven days, the asset has lost about 15.5% of its value. The decline has intensified amid broad market sell-offs from January 31 to February 1.
At its lowest point, the price dropped to $95.87, but then found local support. Since then, quotes have bounced back nearly 8% and are trading around $103.15. This rebound has allowed for the recovery of much of the recent losses. Moreover, the price movement is accompanied by an improvement in capital flow metrics. This indicates a return of buyers, although risks remain.
Activity of large capital at the support level
The recent price decline followed a clear technical pattern. On the daily chart, SOL completed the formation of a 'head and shoulders' pattern at the end of January. The calculated target for the decline pointed to the range of $95–$96.
This level was reached almost perfectly at $95.87.
After touching the bottom, selling pressure noticeably weakened. Buyers began to return to the market. This is confirmed by the Chaikin Money Flow (CMF) indicator. It tracks capital movement into the asset using price and volume data. An increase in the indicator signals accumulation of positions by large investors.
During the period from January 27 to February 3, the price of SOL decreased, while the CMF moved upwards. This situation is called bullish divergence. It means that money continued to flow into the asset even amidst falling quotes.
Such behavior is atypical for sharp corrections. Usually, the money flow falls along with the price. In this case, the growth of CMF indicates that institutional investors found the $95–$96 zone attractive for entry.
The indicator is now approaching the zero mark. Crossing this line will confirm the dominance of buying pressure over selling pressure. This will strengthen arguments in favor of recovery. Data shows that the defense of the $96 level was not random. It was backed by large capital.
Behavior of long-term holders and speculators
Sustainable growth requires support from long-term investors. In the case of Solana, this is confirmed by Liveliness indicator data. This metric measures the frequency of spending long-held coins. A decrease in the indicator indicates asset retention.
Over the past month, Liveliness for SOL has shown a downward trend.
Even during the crash from $127 to levels below $100, no significant spikes in activity were recorded. Except for a short-term rise on January 29–30, the indicator continued to decline. Therefore, long-term holders did not panic. They preferred to hold their positions.
This behavior confirms the hypothesis that the current decline is perceived as temporary. However, the structure of market participants remains heterogeneous.
The HODL Waves indicator shows the distribution of coins by holding time. The data indicates that a group of short-term traders (from 1 day to 1 week) has increased their positions. Their share has risen from 4.38% to 5.26% during the period from December 31 to February 1.
This category of participants tends to buy dips and quickly take profits during rebounds. Their growing presence increases volatility. There is also an increased risk that the upward momentum may fade at the slightest price rise.
Thus, long-term investors demonstrate confidence, while speculators increase activity. This creates a mixed picture. The situation favors a short-term rebound but limits growth potential without additional institutional money inflow.
Key technical levels and targets
Against the backdrop of improving momentum, price levels are becoming more important than indicators. The first critical support is in the range of $95.87–$96.88. This area marks the completed target of the decline.
As long as quotes remain above this zone, the recovery scenario remains valid. A break of support will open the way for a decrease to $77. This will cancel most positive forecasts.
The nearest local resistance is located around $103.60. The asset is currently testing this area. A confident daily close above this mark will signal local buying strength.
However, the most important milestone is the level of $120.88. It is significant for three reasons:
A trend break occurred here on January 29.
The level coincides with the 20-day exponential moving average (EMA), which acts as dynamic resistance.
A successful return above this zone at the beginning of January previously led to a rise of 17%.
A consolidation above $120.88 on the daily chart will signal a change in initiative. It will also mean the end of the correction phase. In this case, the next targets for buyers are at $128.29 and $148.63.
However, the realization of this scenario depends on the continued inflow of capital. If trading volumes are formed only by short-term traders, the growth may stop before reaching the specified targets.
