- Solana (SOL) recently plummeted to a 30-day low of $82 amidst a broader downturn in the altcoin market.
- The article explores the factors contributing to SOL’s decline, citing bearish sentiment, shrinking altcoin market cap, and decreasing derivatives market interest, ultimately forecasting a potential further drop to $75.
Exploring the Factors Driving Solana’s Decline and Predicting Potential Price Targets
Solana (SOL) recently experienced a significant setback, sliding to a 30-day low of $82 on January 22. This decline follows the crypto market’s broader trend as investors trim their mega-cap altcoin holdings. Despite being one of the top-performing mega-cap altcoins during the pre-Bitcoin ETF rally, SOL has seen a downturn since reaching a 2-year peak of $126.1 on December 25.
On-chain Insights into Solana’s Decline
While the Solana network has displayed robust growth metrics, including increasing network usage and daily active users, the price dropped to $82 on January 22, marking a 20% loss within the week. The bearish sentiment affecting the broader altcoin market, as reflected in TradingView’s TOTAL3 chart, has been a key driver of SOL’s decline.
The TOTAL3 chart reveals an 8% downtrend in the global altcoin market cap, excluding Bitcoin (BTC) and Ethereum (ETH). With the total altcoin market shrinking by $32 billion in the past week, it’s evident that investor confidence in the sector is waning, impacting SOL disproportionately as the 8th largest cryptocurrency.
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Derivatives Market Signals Caution
In the derivatives market, SOL investors are bracing for further downside as they close out positions. Santiment’s open interest data indicates a $226 million decrease in SOL open interest since January 17, reflecting a 20% decline in price.
The decline in open interest signals growing disinterest among investors, with more exiting positions than entering. This negative sentiment is a substantial contributor to SOL’s ongoing price downtrend.
Forecasting SOL’s Future
Considering the trends in derivatives and market data, SOL’s price could head towards $75 in the coming days. Bollinger bands technical indicators support this bearish outlook, with SOL trading below the 20-day Simple Moving Average price of $93. This suggests investors are willing to pay less for SOL than they were just 20 days ago.
While there might be a potential rebound around the lower-Bollinger band at $85, failure to hold that level could see SOL sliding further towards the $75 mark. As the crypto market navigates through volatile conditions, investors are advised to closely monitor these indicators to make informed decisions in the ever-changing landscape of digital assets.
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