Solana's price on-chain metrics remain bullish, characterized by high transaction rates and a notable increase in total value locked (TVL), reflecting growing investor confidence. Solana, which recovered from a staggering 96% crash, has risen to become the fourth-largest cryptocurrency by market capitalization. Recently, the asset broke out from a bearish market structure, signaling a potential bullish phase. Despite an 8% drop in the last 24 hours, trading at $169, the price analysis suggests that Solana (SOL) may rally back to its yearly high of $210.
Solana Price Eyes a Bounce
Solana's price is in an upward trend, having broken out of a descending triangle pattern and trading above both the 50-day (green line) and 200-day (black line) exponential moving averages (EMA). This breakout signals strong bullish momentum, further supported by recent candlestick formations with large green candles, indicating robust buying pressure.
Currently, a small double-top pattern is forming above the descending triangle, with price action at the neckline around $169. A break below this level could lead to a drop to the key support level of $160 (50-day EMA). If bearish pressure persists, Solana's price may fall to $138 (200-day EMA), which lies within the triangle. Conversely, a bounce from the 50-day EMA could propel SOL to the next major resistance level at $210, marking a potential 30% upswing.
The Relative Strength Index (RSI) is at 62.35, indicating bullish momentum but nearing the overbought region. This suggests a slight pullback might occur before further upward movement. The Chaikin Money Flow (CMF) supports the RSI, currently at 0.12 but trending downward, indicating positive money flow but reducing buying pressure. The spike in Solana's trading volume during the descending triangle breakout confirms the validity of the upward movement, with sustained high volume supporting further bullish continuation.
Should the asset break below the $138 (200-day EMA) support level, it would signal market weakness, potentially leading to a swing low to the next support level of $98. This scenario would turn Solana's price action bearish, invalidating the current bullish thesis supported by the triangle breakout.
SOL On-Chain Metrics Support a Bullish Scenario
Data from the Solana explorer Solscan shows the current true transactions per second (TPS) at 700, with an average transaction success rate of 91%. The high TPS and success rate indicate Solana's capability to scale to more users, which is bullish for SOL's price.
This bullish premise is reinforced by the growing number of active accounts on Solana, which reached a three-month high on July 31, 2024. This increase signals a surge of investor interest in the network, suggesting that Solana's price is poised to follow suit. Additionally, the rising number of wallets has led to a 19.23% month-to-date increase in Solana's total value locked (TVL), indicating that new investors are gaining confidence and funneling funds into the network.
However, if TPS drops significantly, it could result in investors fleeing the network. Reduced volume may negatively impact TVL, causing SOL to become overvalued and invalidating the bullish on-chain thesis.
In conclusion, while Solana faces short-term corrections, its long-term outlook remains positive, supported by strong on-chain metrics and a potential rally to the $210 target. Investors should monitor key support levels and on-chain activity to gauge the sustainability of Solana's bullish momentum.
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