Discover the underlying factors driving the recent price dip in Solana (SOL) as we delve into market intricacies and expert predictions. Explore what's been affecting SOL's performance and what lies ahead for this popular altcoin!
Solana (SOL), like many other cryptocurrencies, experienced a notable downturn recently, with a 10% decline over the weekend. Failing to close above the crucial psychological level of $150 on the weekly candle, SOL traders saw $15 million in liquidations over the past day. This decline came amidst a consolidating phase for SOL between $162 and $125, a battleground where buyers and sellers have been competing for dominance since April.
One significant reason behind Solana's struggle to maintain strong upward momentum is the notable decrease in market activity following its crash in early August. Despite a swift recovery above $125, both futures and perpetual open interest (OI) have seen a considerable decrease. Since the beginning of August, open interest has dropped from $2.47 billion to $1.7 billion, a decline of 32%. This drop in OI, although potentially bullish indicating deleveraging in the futures market, has left SOL traders cautious even after a 25% recovery swing to $165. During this recovery, the OI only increased by $200 million.
Additionally, Solana's spot volumes have also reflected a lack of urgency in trading activities. A stark contrast is visible when comparing the $74 billion in spot volumes globally on August 5th to the current $7.5 billion. This recent decrease in spot volumes hints at low liquidity being another contributing factor to SOL's recent 10% drop over the past two days.
Despite the recent turbulence, some analysts remain optimistic about Solana's future price potential. One analyst, Matthew Dixon, CEO at Evai.io, highlighted the possibility of SOL setting up for a significant week above $190. Observing a "nice clear five waves up" after a weekend correction, Dixon's analysis based on Elliot wave theory suggests further upside potential for SOL, with a minimum price target of $194 and the potential for even higher gains. From a technical standpoint, breaking above $150 on the daily candle is seen as essential for SOL. The altcoin has been consolidating between $162 and $127 for a significant portion of the past few months, with $150 playing a key role in its price movements.
Past trends have shown that when SOL surpassed $150 convincingly, it managed to rally and breach the range high of $162. Despite previous successes, the most recent rally above $150 failed to push SOL above $162, indicating a challenging period for the altcoin.
At present, Solana is priced at $150 with ongoing volatility driving significant trading volumes, exceeding $4.2 billion in the last 24 hours. It is crucial to note that cryptocurrency investments carry risks, and movements in the market can be influenced by various factors. This article serves as general information and should not be taken as legal or investment advice. Stay informed on developments in the market to make well-informed decisions regarding your cryptocurrency investments.
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(Biraajmaan Tamuly, Cointelegraph, 2024)