Solana Price Flashes $3.1B Bottom Formation Signal: Will Buyers React?

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On January 12, for a brief moment, the cost of Solana surged past $190, marking a 3% increase as the recovery phase in the cryptocurrency market gained momentum. Analysis of recent trading activity indicates that SOL holders, who experienced double-digit losses last week, are becoming increasingly hesitant to offload their coins at the current prices.

Solana bulls sets sights on $200 rebound after volatile week

On January 12, for a short while, Solana (SOL) surged past $190, mirroring the ongoing recovery trend in the broader cryptocurrency sector. Despite a significant drop the previous week, Solana has since found its footing, largely due to increased market enthusiasm.

From January 5th to January 9th, the price of SOL dropped by 15.7%, falling from $220 to $183 during a significant market sell-off. However, as the selling pressure started to ease, SOL saw a 3% increase over the last two days, reaching a high of $193 on January 12th. This upturn indicates that the market’s sentiment might be improving, albeit at a slower pace compared to other major altcoins when it comes to Solana’s recovery.

Competing cryptocurrencies like Cardano, Ripple, and SUI have seen more substantial growth compared to Solana over the same timeframe. This suggests a potential negative factor that may be hindering Solana’s ability to regain its upward price trend.

Solana Trading Volume plunges by $3.1B as sell-fatigue sets in

Over the past few days, it’s become quite apparent that Solana hasn’t been performing as well as its competitor altcoins. A more detailed examination of Solana’s trading data highlights a noticeable decrease in SOL market activity during recent weeks, indicating a decline in investor engagement.

Santiment’s Trading Volume graph monitors daily transactions in the SOL spot market, providing up-to-date information about fluctuations in market liquidity and investor enthusiasm. On January 8, Solana’s trading volume peaked at an impressive $5.02 billion, reflecting high market activity. Yet, as a widespread sell-off in the crypto market unfolded, Solana sellers grew more hesitant to part with their assets, leading to a steady decrease in transaction volumes.

By January 11, Solana’s trading volume dropped significantly to approximately $1.9 billion, indicating a steep decline of around $3.1 billion within three days. This massive decrease equates to a startling 61% reduction in trading activity. While the price of SOL fell by 15% during the same timeframe, this dramatic drop in trading volume compared to the price change often suggests reduced market involvement. This could imply that both buyers and sellers are becoming more hesitant.

When the trading volume decreases more rapidly than the price, it frequently suggests that sellers are running out of energy, causing the bearish momentum to weaken. Although this could lead to a price increase, the reduced liquidity also hinders the possibility of a prolonged rally for Solana. This situation represents an ongoing struggle between optimistic holders and market forces that are slowing its potential recovery.

Solana Price Forecast: $250 Breakout Unlikely within Current Dynamics

As a researcher, I’m maintaining a cautious stance on Solana (SOL) price forecast, given the ambiguous signals from our technical indicators for the short term. Currently, Solana is trading at $186.82, significantly below the mid-point of the Keltner Channels (KC) at $198.65. This suggests a decrease in bullish momentum, further emphasized by the Parabolic SAR consistently residing above the price candles, indicating persistent bearish influence.

Right now, the Relative Strength Index (RSI) stands at 47.55, which is slightly less than the neutral 50-point benchmark. This indicates that there’s not much strong buying or selling pressure currently, making SOL potentially susceptible to additional downward movement. At the moment, $175.70 serves as an immediate support level for SOL, and if it drops below this point, it might lead to a fall towards $170. On the flip side, should SOL manage to surpass the $198.65 resistance, it could rekindle bullish sentiments, with potential targets reaching as high as the upper limit of the KC at $220.76.

Despite relatively low trading volume of 590,000 SOL being recorded, the market’s involvement remains somewhat lackadaisical at present, reducing the immediate chances of a $250 price increase. A significant spike in volume is worth watching for, as it could signal a directional breakout confirmation.

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2025-01-12 21:02