- Solana (SOL) faced a rough August with significant declines, raising concerns about its price dropping below $100 in September.
- Key indicators, including rising open interest and a negative funding rate, suggest bearish sentiment, making the $127 support level critical for the altcoin’s stability.
August has been a challenging month for Solana (SOL), with its price experiencing its second-worst weekly return of 2024, closing down 19.14%. The only week that saw a larger drop was in July, with a staggering 25.19% decline. This trend has fueled speculation about whether Solana could fall below the critical $100 mark in September.
Key Indicators Point to Bearish Sentiment
Solana’s Open Interest and Funding Rate
A significant rise in Solana’s open interest (OI) by 20% amid a price drop below $150 highlights a trend of aggressive short-selling by futures traders. Despite the price falling another 14%, the increase in OI signals that traders are betting on further declines. Additionally, a negative funding rate, which has persisted for over a week and hit its lowest in 2024 at -0.001, underscores a prevailing bearish outlook in the market.
Declining DEX Volume
Onchain activity for Solana has also waned, as indicated by a drop in decentralized exchange (DEX) volume to a six-month low of $7.7 billion last week, according to Dune Analytics. This contrasts sharply with earlier in the year when Solana’s daily DEX volume regularly exceeded $3 billion and was 50% higher than Ethereum’s.
The $127 Support Level: A Critical Test
As Solana navigates these turbulent waters, the $127 support level emerges as a crucial test. Since April 2024, the price has dipped below $120 multiple times but managed to close above $127 each time, marking it as the lower boundary of an accumulation zone. However, Solana has recently fallen below the 200-day EMA, which could further weaken the support structure.
Potential Price Scenarios
Should Solana breach the $127 level, the immediate support target would be $110. A recovery from this level would be favorable for bulls, but if bearish conditions persist through September, Solana could face a retest of the demand zone between $98 and $104. A drop to $100 would signify a severe 22% correction and establish a new lower low for the altcoin.
What Lies Ahead?
The performance of Solana in September will largely depend on broader market movements, particularly Bitcoin’s trajectory. If Bitcoin experiences a bullish Q4, Solana might avoid falling below $100. However, with current indicators pointing towards ongoing bearish conditions, investors should brace for potential volatility and closely monitor key support levels.
In summary, while a drop under $100 remains a possibility, the outcome for Solana in September hinges on broader market trends and its ability to maintain critical support levels.
