Solana (SOL) Declines Below 3-Year Support — Price Faces Critical Test

Key Takeaways

• Solana has fallen below its Realized Price of $134 for the first time in three years, signaling potential further downside.
•  Sentiment remains negative, and the 200 EMA crossing above the 50 EMA suggests SOL’s correction may not be over.
• If buying pressure remains weak, SOL could drop to $85.52, but a strong rebound could push it toward $190 or higher.
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Solana’s (SOL) extended downturn continued this week. On Monday, it failed to recover its opening price of $178.50.

As of this writing, Solana’s price is hovering around $125 and showing signs of further decline.

However, that is the only issue, as on-chain data reveals that the altcoin might continue to experience further downtime following its failure to hold a key long-term support region.

The question is: Where does SOL price go from here?

SOL Still Not at Bottom

Solana’s price surged close to $300 because its market value maintained its position above the Realized Price. But this week, SOL slid below its Realized Price of $134 for the first time in three years.

The Realized Price represents the average price at which SOL was last transacted and serves as a key support level for short-term holders. A drop below this level signals a potential continued decline.

Fundamentally, when the market price dips below the Realized Price, it can present an accumulation opportunity for long-term investors. Typically, when the market price is above the Realized Price, holders are in profit and more likely to sell.

However, holders may hesitate to sell at a loss if the Realized Price surpasses the spot price, creating a buying window before a potential rebound.

Solana’s Short-Term Outlook Clouded by Bearish Sentiment

In SOL’s case, it might be too early to conclude due to the unstable market conditions. However, further assessment of Solana’s on-chain metric shows that the token is not yet at the bottom.

For instance, the Weighted Sentiment, which examines the level of positive or negative commentary in the market, is below the zero line. When the metric is above the zero line, it means most remarks about an asset are bullish.

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However, since it is the other way around for SOL, it indicates that the broader market is bearish on the altcoin’s potential in the short term. Should this remain the same, Solana might struggle to attract enough demand to spark a rebound.

SOL Price Analysis: Trend Signals Danger

The technical outlook also seems to agree that SOL’s correction is not over, according to signals from the Exponential Moving Average (EMA). The EMA is a technical indicator that measures trend direction by looking at the crossover between different periods.

According to the daily chart, the 200 EMA (blue) has crossed over the 50 EMA (yellow) for the first time since February 2022. Known as a death cross, this position crashed Solana’s price from $116 to a single-digit value within some months.

However, it’s important to note that the FTX collapse at the time also played a role in the correction. At the same time, that is not to say that SOL might not continue dropping.

If buying pressure fails to come in and save the day, Solana’s price risk plunging below $100. Using the Fibonacci retracement indicator, this technical setup could send SOL down to the 0.236 pullback level at $85.52.

On the flip side, if SOL retests the support at $125.56, this correction might not happen. In that case, it might undergo consolidation.

But if demand for the altcoin increases and market conditions improves, the value could be higher.

In that scenario, Solana’s price might target a return to $190.28 before a potential run toward $236.36.