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Solana (SOL) has been in a bearish trend in the last 24 hours, dipping to $164 after bulls' power faltered upon facing resistance. This trend, however, was nullified after support was established, and as a result, bulls were in control of the market at press time, with SOL trading at $174.84, a 1.28% surge from the day's low.
Concurrently, SOL's market capitalization and 24-hour trading volume surged by 1.22% and 17.49%, respectively, to $78,079,431,062 and $3,255,315,108. This surge reflects the investors increased interest and optimism for a potential bull rally looming.
SOL/USD 24-hour price chart (source: CoinMarketCap)
Despite the recent surge in trading activity and decentralized finance (DeFi) projects on the Solana network, congestion issues have plagued its operations. Recent reports indicate that over 75% of on-chain transactions have been failing, leading to users shifting to Ethereum for seamless transfers.
Austin Federa, Head of Strategy at the Solana Foundation, revealed that developers have been diligently working to address these congestion issues. Federa explained that the root cause of the problem lies in the software system's inadequacy in handling the current volume effectively. He emphasized that developers from various core contributors are actively implementing and testing improvements to alleviate network congestion.
Federa highlighted the ongoing efforts by developers to resolve the congestion issues on the Solana network. He acknowledged diverse opinions on the root cause of the congestion but clarified that, fundamentally, it stems from the software system's inability to handle the current volume.
Despite facing setbacks, core protocol developers are swiftly implementing and testing improvements in the networking stack to address the congestion. This includes developers from Anza, Firedancer, Jito, and other core contributors who are working tirelessly to shore up Solana's networking stack in response to unprecedented demand.
In light of recent market volatility, the price of SOL has fluctuated, testing support levels and facing resistance. Despite the bearish trend, there are signs of impending recovery, with buy-the-dip activities increasing as traders seek market opportunities.
A falling wedge pattern on the four-hour chart indicates a potential 10% move in SOL price, provided several four-hour candle closes above key resistance levels. Traders are advised to exercise caution and closely monitor price movements, especially as the market reacts to global economic factors such as inflation concerns. Moreover, veteran trader Peter Brandt predicts a multi-week correction for Solana, with prices likely to drop further.
SOL/USD price chart (source: Peter Brandt)
Technical indicators suggest a critical juncture for SOL price action. While support at $160 has been tested multiple times in recent weeks, there are indications of a potential rebound. The Relative Strength Index (RSI) remains neutral, providing opportunities for short-term long positions as traders anticipate a recovery. A breakout above key resistance levels could validate an uptrend, with potential targets set at $185 and beyond.
