Solana 9.6% decline Pushes it Far from the ATH Attained A Week Ago

On 23 November SOL attained its fresh all-time high of $263.21. However, since that peak its price nose-dived. As of now, it is 13.6% lower than the ATH as it costs $135.14 SOL/USDT on Gate.io exchange. The following graph shows SOL’s price decline soon after its recent ATH. 

As observed in the graph, SOL is within a strong downtrend. However, many other cryptocurrencies have witnessed high bearish pressure during the same period. Bitcoin’s failure to surpass $100,000, a key psychological level could have generated negative market sentiment. For example, within the last 7 days the bitcoin price has fallen by 0.2% while ETH lost by 4.15%. As the next table shows, many leading cryptocurrencies are in red. This indicates a market-wide bearish period. 

The crypto market-wide price retreat may have different interpretations. As already hinted above, Bitcoin’s failure to surpass $100,000 might indicate a local market top which influences the performance of many other digital currencies. This could also function as a pullback to work-off the overbought market states of most cryptocurrencies that sustained long periods of price rises. The bitcoin price trajectory only shows that the investment asset markets do not move in straight lines for indefinite periods. Thus, the  principle of mean-reversion is at work.  This should also enlighten the investors that better days are ahead in the crypto sector. 

Another reason for SOL price drop might be the United States president-elect, Donald Trump’s rhetoric. Recently, he indicated that once in office he may increase tariffs on several countries such as China, Mexico and Canada. The crypto investors might have interpreted that the move may slow-down global economic growth. Naturally, this affects the performance of many investment asset markets including the crypto sector. 

The other cause of the current SOL price dip could be the poor performance of Solana-based digital assets like meme coins. Most of these assets shed off much value during the past week leading to the fall in the total market capitalization of Solana-based tokens from $347.8 billion on 25 November to   $228.8 on 26 November.  Also, there was a surge in the sell-side trading volume on the Solana ecosystem. This could have forced the investors to react negatively leading to a fall in the demand for SOL. 

Solana Market Analysis

The current daily price movement shows that SOL is in a bearish period. Its technical analysis confirms that outlook as the next image indicates. As it shows on Gate.io, the futures trading is at $134.96 SOL/USDT.

As the picture shows, the Bollinger Bands is widening on the downward side, showing a high chance of a further price fall. On the other hand, the upper Bollinger Bands boundary is falling downwards in response to the decreasing price. As you may note on the image the sell-activity volume is high showing increasing bearishness. In addition, the RSI has a reading of 70.70. This depicts an overbought market state. As such, the SOL price is likely to fall further. It is also important to note that SOL has just broken below an ascending wedge pattern. The next graph, though, shows that SOL may continue with its uptrend, sooner or later. 

The picture above shows the technical indication of the 50-day EMA and 200-day EMA. Basically, the price is above the two EMAs. Also, the gap between the price and the 50-day EMA is still very large which shows that the uptrend may still be intact. Second, the two EMAs are diverging, another strong indication of a valid uptrend. Based on the moving average - price action relationship, SOL is within a short term correction. Thus, its price may rise in the near future. 

SOL Price Prediction

It is important to note that SOL is still above a key support level at $226. However, the tail of the pin bar has encroached in the demand zone around that price mark. In addition, the price is close to the 0.382 Fibonacci line which aligns with the $222.84 price mark. If there is further selling pressure SOL’s next target would be $210 which coincides with the 0.5 Fib level. Note that these Fibonacci levels have been generated from the swing low at $157.50 and the swing high at $265.08. Generally, there is a potential that the SOL value may rise to $254.07, the 18 November swing high. From there, it may rise above $265.08. 

Digitalcoinprice forecasts the SOL price to reach $495.58 SOL/USDT this year. And still, there is an outside chance that it may rise to $508.18. Some analysts predict a very high SOL price. For instance, Titan of Crypto forecasts its price to reach $1,400 SOL/USDT. However, commenting on the same post Fuselwhale said that $1,400 is unrealistic. As such, he believes that the SOL value may fluctuate between $400 and $500 during the current season. All the same, some of these high SOL price forecasts only show that there is high investor confidence in the number 4 ranked cryptocurrency.