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Cryptocurrency News Articles

Solana's Rollercoaster: Bullish Sentiment Stumbles Amidst Declining On-Chain Metrics

Apr 24, 2024 at 01:10 am

Solana (SOL) has recently experienced a surge in price, sparking interest despite declining on-chain metrics. While new addresses and whale selling indicate bearish sentiment, positive signals include increasing on-chain transfers and buyer accumulation. The price currently hovers around $158, facing resistance at the 200-day EMA. If buyers overcome this level, a potential rally towards $192 is possible, while a decline could lead to support at $126 or even $100.

Solana's Rollercoaster: Bullish Sentiment Stumbles Amidst Declining On-Chain Metrics

Solana's Rollercoaster Ride: Declining Metrics Amidst Bullish Market Sentiment

Solana (SOL), a blockchain platform known for its high speed and low transaction costs, has become a popular topic of discussion in the cryptocurrency community. Despite its recent price recovery, which mirrored Bitcoin's upward trajectory towards $66,000, Solana has witnessed a decline in several crucial on-chain metrics.

Mixed Market Sentiment: Bulls vs. Bears

The market is currently embroiled in a tug-of-war between buyers and sellers, with both parties vying to establish a clear price trend for SOL. Currently fluctuating within a range-bound ascending channel, Solana has seen buyers gradually gaining the upper hand, leading to a surge in liquidations.

Data from Coinglass indicates that Solana has experienced liquidations totaling approximately $6.8 million, with buyers accounting for around $2.5 million and sellers for roughly $4.3 million.

Declining New Addresses: A Bearish Indicator

A notable concern has emerged with the significant drop in Solana's new address count. IntoTheBlock data shows a sharp decline from a peak of 915,000 to 866,000, suggesting a waning interest in the market to invest in SOL. This development has sparked a rise in bearish sentiment.

Whales on the Prowl

Market experts believe that whales, large holders of cryptocurrency, may continue their selling spree, potentially driving SOL's price down before a meaningful recovery can occur. The uncertainty surrounding both Solana and the broader market, compounded by the pressure on miners following Bitcoin's recent halving, contributes to the current volatility.

Buying Demand Remains: A Counterpoint

Despite these bearish indicators, there are signs of continued buying demand for SOL. IntoTheBlock data reveals that the value transferred on the Solana blockchain has been rising, recently recovering from a low of $64 billion to reach $90 billion, indicating an appetite for the asset.

Long/Short Ratio Tilts Bearish

The long/short ratio, an indicator that measures the balance between buyers and sellers, has dipped to 0.8512, suggesting growing bearish dominance, with 54% of positions now anticipating a decline in SOL's price.

SOL Price Outlook: Resistance and Support Levels

On the price charts, SOL has approached its 200-day Exponential Moving Average (EMA) at $158, which is likely to serve as a significant resistance point. Buyers have been accumulating aggressively in recent hours, pushing the price above immediate Fibonacci levels. At the time of writing, SOL is trading at $158.1, having gained over 3.3% in the last 24 hours.

If SOL can break above the $162 level, it would signal a potential resurgence of bullish sentiment. In such a scenario, the SOL/USDT pair could eye a rally towards the next major resistance at $192.

Conversely, a decline from current levels could indicate a surge in negative sentiment, with traders selling during price rallies. This could lead to a drop towards the solid support level at $126. If SOL breaks below this threshold, a further decline to $100 is a possibility.

The RSI level, an indicator that measures price momentum, is rising but remains below the overbought threshold, suggesting that SOL's upward momentum could continue, potentially retesting its previous breakdown point.

Conclusion

Solana's recent price recovery has been overshadowed by concerns surrounding declining on-chain metrics, suggesting a mixed market sentiment. While there are indications of continued buying demand, the drop in new addresses and the rising number of whale sell-offs paint a bearish picture. However, the RSI's trajectory leaves room for cautious optimism as SOL attempts to overcome key price resistance levels. The market's volatility and the uncertain macro environment will continue to influence SOL's performance in the near term.

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