Solana’s price is seeing a surge in buying interest after a strong bounce from a critical support level that restored investor confidence by holding above $100. The upward move follows Bitcoin’s surge past $43,300, sparking a wave of short-term liquidations across the market. Despite this positive momentum, current on-chain data suggests that Solana’s $100 rise may be temporary. This is because major indicators are signaling an upward bearish trend.
Demand for Solana drops significantly
In the last 24 hours, total liquidations in the cryptocurrency market exceeded $106 million, with sellers liquidating positions worth $95 million. In particular, Solana witnessed a short-term liquidation of approximately $6.5 million.
The recent rise in Solana’s price was initially triggered by holders breathing a collective sigh of relief following a severe network outage that left the blockchain temporarily inoperable. Amazingly, the network ran for almost a year without any major interruptions.
Despite the bullish comeback, there are potential risks that could halt Solana’s upward trajectory as on-chain indicators begin to show a bearish trend. Recent on-chain data shows a noticeable decline in demand for Solana, with the number of active addresses plummeting from 1.02 million to a recent low of 801,000, indicating reduced activity among holders.
Additionally, Solana experienced a significant decrease in transaction fees from $1.21 million to $581,000. This reduction in total fees shakes up buyer momentum and potentially gives sellers more influence over price.
In turn, this could act as a catalyst for a SOL price correction. Solana’s long/short ratio is currently trending downward, falling below 1 from its current level of 0.7334. This indicates a growing bearish sentiment, with approximately 58% of positions betting on a price surge.
What’s next for SOL pricing?
Buying forces are currently dominating the price chart, with buyers attempting to break the resistance channel in the coming hours. However, sellers are strongly defending against a surge above the immediate Fib channel and this is creating strong momentum for SOL price. At the time of writing, the price of SOL is trading at $104.7, a surge of more than 8.5% from yesterday’s rate.
If the price fails to surge above the resistance line, the first support level is the rising downtrend line. If this level is violated, SOL price could potentially fall towards significant support level at $80. A strong bounce from $80 could take the price back to the 20-day EMA. A break above this barrier could lead to a period of consolidation within the $107-$80 range.
For the bulls to maintain control, they will need to successfully push and hold the price above $110. Afterwards, the price could target the next major resistance level at $116.