Over the past two days, the market has experienced significant volatility, bringing instability to the Bitcoin and altcoin markets. Solana was particularly affected, experiencing large-scale liquidations, leading to a fierce competition between buyers and sellers. At the same time, Solana's various on-chain indicators showed a downward trend, indicating strong short-selling power.
Solana faces sharp decline in active addresses
Over the past day, SOL’s price has seen wild swings around $140. Solana’s total liquidations exceeded $21 million, with long positions accounting for $15 million. Meanwhile, Solana’s trading volume increased by 90% to $3.5 billion, showing a significant increase in single-day trading volume.
However, amid this market volatility, various on-chain metrics are showing a downward trend. According to the on-chain active addresses data, the number of active addresses is on a downward trend. This indicator has dropped from a weekly peak of 1.59 million to a recent low of 1.44 million, a change triggered by the recent market crash. If the number of active addresses continues to decrease, the price chart may see a significant decline in the coming days. In addition, the on-chain transfer value has also seen a multi-billion dollar decline in recent weeks.
One potential driver of Solana’s value could be the approval of a spot Ethereum ETF, which could happen as early as this week. Once approved, billions of dollars are expected to flow into these funds, similar to what happened with Bitcoin earlier this year.
After this incident, the SEC may focus on the Solana ETF spot. VanEck has already submitted an application for a Solana ETF, and other companies such as BlackRock, Franklin Templeton, and Ark Invest are expected to apply for approval of their own Solana funds soon.
Where will the SOL price go next?
Solana is currently in the process of forming a bearish descending triangle pattern, which will be confirmed once the price breaks out and closes below $118. However, the breakout of the direct Fibonacci channel decline is being firmly defended by the bulls. As of the time of writing, SOL is priced at $141, having gained more than 0.9% in the past 24 hours.
On a positive note for the bulls, the RSI is showing a possible positive divergence, which suggests that the selling pressure might be decreasing. If the bulls can push the price above the 20-day EMA, the SOL/USDT pair could rally to the 50-day SMA ($153) and then approach the downtrend line.
Once it breaks out of the trendline, the price is likely to retest $188. Conversely, if the price turns down from the 20-day EMA and breaks below $118, it will consolidate the bearish setup. In such a case, the pair can drop to $80.
The strong rebound from $121 suggests that the bulls are aggressively defending the support at $118. If the price rebounds from the current levels and breaks above $150, we are likely to see a significant increase in buying demand.
That’s all for today’s article. We are currently in a bull market, and things are turbulent. We share passwords every day.
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