Solana’s price has recently surged, breaking through the $200 mark to reach a three-year high of $225.21. Solana’s price surge was driven by positive momentum in the broader cryptocurrency market and rising demand for Layer 1 (L1) blockchain networks.
However, Solana has begun to give back some of its recent gains as buying pressure wanes and profit-taking increases. This means a drop back below $200 is possible during this period. How likely is this to happen?
Solana traders start to take profits
SOL is currently trading at $202.51, with the price down 5% in the past 24 hours. Notably, its trading volume has surged 3% in the same period, highlighting the rise in selling pressure.
Solana price and volume.
When an asset's price falls while trading volume rises, it indicates an increase in selling activity as more market participants actively sell their holdings. The combination of falling prices and rising trading volume indicates strong bearish sentiment in the market.
This confirms that during the review period, many SOL traders chose to sell their tokens rather than buy more. This caused the token price to fall as the supply sold exceeded the buying demand.
Furthermore, the token’s negative balance of power (BoP) also supports this bearish view. This indicator measures the strength of buyers versus sellers in the market and is at -0.43 at press time. A negative BoP indicates that sellers are in control and are trying to push the price of an asset down further.
Solana BoP。
SOL Price Prediction: $193.92 Price Level is Key
Additionally, a surge in Solana’s funding rate suggests that prices could continue to fall back below $200. As of this writing, the rate has surged to an eight-month high of 0.037%.
Solana funding rates.
The funding rate is a mechanism used in perpetual futures contracts to keep the contract price in line with the spot price of the underlying asset. When the funding rate spikes, it usually indicates a serious imbalance in the market - usually controlled by buyers. This is seen as a bearish signal, indicating that prices are about to pull back.
This happens because as the cost of holding a long position increases, some traders may choose to close their positions to avoid high financing fees, which may put downward pressure on asset prices. In addition, if asset prices begin to fall, highly leveraged long positions are at risk of liquidation, which may trigger a chain reaction that causes prices to fall further.
At press time, SOL is trading at $202.51, just above its support level at $193.92. An increase in selling pressure could push the token’s price to retest this critical support level. If the bulls fail to hold this level, it confirms the downtrend, pushing the price of SOL further down to $169.36.
Solana Price Analysis.
On the other hand, if this support holds strongly, it could spark a rally that could reignite the Solana price surge. If that happens, the uptrend in SOL has the potential to retest its three-year high of $225.21.
