Solana (SOL) Holds Above $120, Fueling Anticipation of a Bullish Comeback

With the crypto market at a potential crossroad of a bullish comeback, Solana is witnessing a minor recovery above $120.

Solana is showing minor recovery above $120 as the crypto market stalls at a crossroads of a bullish comeback, but analysts warn of a potential downfall for Solana.

Solana Sell Signal

On the daily chart, Solana’s price trend shows a quick bullish recovery with a 5.98% increase on March 11. This ends a streak of five consecutive bearish candles but fails to establish a new bullish trend.

As of press time, there is a short-term pullback of 1.14%, trading at $123.94. This could be a retest of the broken $130 demand-turned-supply zone.

Solana’s decline from its all-time high at $295 has resulted in nearly a 60% drop. This has led to a “death cross” event between the 50 and 200 EMA lines.

Moreover, the 100 and 200 EMA lines are on the verge of crossing over bearishly, which would trigger a strong sell signal from the EMA lines.

Declining Meme Coin Trading Volume Is Hurting Solana

Brandon Farmer, an analyst at ZeroKnowledge Polygon, raises a question about Solana’s real economic value.

According to the analyst, the previous spike in Solana’s real economic value (REV) was driven by the high meme coin trading activity on decentralized exchanges.

The surge in meme coin trading led to significant demand for block space, with transactions per second increasing as speculative traders executed large volumes of trades. This created a “SOL wealth effect,” driving up the SOL price, generating more liquidity, and increasing risk appetite.

However, with the recent price drop in Solana, traders have become more risk-averse. Additionally, the activity of meme coins on the Solana network has sharply dropped.

Solana’s weekly REV has dropped 90% from its all-time high, indicating a massive decline in the network’s ability to generate sustainable transaction fees. As Farmer notes:

“Meme coin trading volume is both unsustainable and mercenary.”

Solana Could Crash Below $1

Supporting the possibility of a massive crash in Solana, technical analyst Gert van Lagen has pointed out a double-top formation in the SOL price trend.

On the weekly chart, van Lagen identifies a key double-top formation in Solana’s price, with the meme season now over.

The analyst also highlights that Solana’s failed non-vote transaction rate has risen to 75%. Given the bearish divergence and the double-top formation, the analyst suggests the possibility of a downswing below $1.