Following its record-breaking peak in December, Solana [SOL] has undergone a retracement, witnessing an 18.18% decline over the last month.
Nevertheless, there seems to be a shift in the narrative as the asset has recorded a 7.09% increase in the past week and a 5.42% uptick in the previous 24 hours.
Despite the apparent bullish trend, there remains uncertainty. While the overall structure leans towards a positive outlook, recent selling activity has raised doubts about the sustainability of this trajectory.
Surge in Transaction Counts Amid Dominance of Sellers
Solana’s network has experienced a surge in transaction volume, with 66.9 million transactions processed in the last 24 hours. This uptick comes as the asset gradually bounces back from its recent downturn.
An increase in transaction counts can indicate either bullish or bearish sentiment, depending on the buying or selling patterns. To interpret this trend, CryptoCrypto has analyzed Solana’s Exchange Netflow.
The Exchange Netflow measures the variance between inflows and outflows of an asset on exchanges. A positive netflow suggests more selling activity, while a negative netflow indicates buying pressure dominance.
Currently, Solana’s Exchange Netflow shows negativity on daily and weekly timeframes, signaling that buying pressure has exceeded selling pressure.
During the last 24 hours, $6.15 million worth of SOL has been sold, with $75.18 million over the past seven days.
Despite the observed buying momentum, SOL’s price surge of 5.42% in the previous 24 hours appears fragile.
A detailed examination of trading volume revealed a 25% decrease, indicating that the recent upswing might lack the necessary market momentum for sustainability.
Typically, a price surge accompanied by a volume drop signifies a temporary rally without strong market backing.
Unless Solana witnesses a corresponding rise in trading volume supporting its price movement, the asset remains vulnerable to a significant retracement.
SOL’s Bullish Potential Endures Amid Pressure
SOL has entered a critical support zone on the chart, operating within a bullish triangular formation.
This support level ranges from $188.89 to $173.24, historically known for substantial buying pressure, although such activity has yet to manifest currently.
If SOL breaches this support zone, it might re-enter the consolidation phase it recently departed from.
Alternatively, if the support level triggers a rally, the asset could see a notable upsurge that might propel SOL towards its prior all-time high and potentially beyond.