The price of Solana (SOL) has sharply declined, losing nearly 11% over the past seven days after failing to break through the resistance level of $220. Following this rejection, SOL fell below the critical threshold of $200, reflecting a strong downward momentum in the market.
Despite the prevailing downtrend, the activity of 'whales' shows signs of accumulation again, with major investors continuously increasing their positions over the past five days. These developments suggest a potential price recovery, although the short-term outlook for SOL remains under downward pressure.
SOL whales continue to accumulate
The number of addresses holding at least 10,000 SOL has sharply decreased from 5,096 to 5,025 during the period from December 28 to January 2, reflecting significant sell-off from major investors during this time. Monitoring these 'whales' is crucial as their buying and selling activity often has a large impact on the market.
When whales reduce their holdings, it may indicate a lack of confidence or profit-taking actions, leading to increased selling pressure and the price could drop further.
The number of addresses with at least 10,000 SOL | Source: Glassnode.
However, the number of whale addresses has started to recover, increasing from 5,025 on January 2 to 5,098 on January 8. This recovery suggests that major investors are accumulating again, which could be a positive signal for the stability or recovery of Solana's price in the near future.
Although SOL is in a downtrend and has lost 14% over the past two days, the increasing activity of whales could signal an improvement in market sentiment and lay the groundwork for a reversal if this trend continues. Such moves often reflect a change in confidence, potentially supporting SOL's price in the medium term.
Solana's DMI shows sellers completely dominate
The Average Directional Index (ADX) of SOL is currently at 42.6, up from 37 just one day prior, indicating that the trend is strengthening. The ADX measures the strength of a trend on a scale from 0 to 100 regardless of direction, with values above 25 indicating a strong trend and below 20 indicating weak momentum or no trend.
The increase in ADX confirms that the current downtrend of SOL is strengthening, implying that selling pressure is dominating the market.
DMI of SOL | Source: TradingView
Supporting this, the directional indicators show that +DI (representing buying pressure) has sharply dropped from 31.5 to 10.1 over three days, reflecting a significant decrease in buying activity. Conversely, -DI (tracking selling pressure) has surged from 8.6 to 33.1 in the same period, indicating a substantial increase in downward momentum.
These changes reinforce the current downtrend and indicate that Solana's price may continue to face selling pressure unless buying activity increases significantly to counteract the negative sentiment.
SOL Price Prediction: Can it recover the $200 level?
The exponential moving averages (EMA) of Solana indicate a bearish outlook, with short-term EMAs crossing below all long-term ones yesterday. This death cross is an important bearish signal, coinciding with the sharp drop from the $200 level.
If the current downtrend continues, SOL's price may test the important support level at $185. Failing to hold this level could lead to deeper declines, with $176 as the next target.
SOL/USDT chart on the 4-hour timeframe | Source: TradingView
Nonetheless, the recent accumulation activity of whales provides a glimmer of hope, as major investors have been continuously buying SOL over the past few days. This accumulation could indicate increasing confidence from major investors, potentially setting the stage for a reversal.
If buying momentum returns, SOL's price may challenge the resistance level of $197. Breaking above this level could pave the way for an increase up to $211, equivalent to a 12.8% recovery from the current price.
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