As we enter 2025, the cryptocurrency market is witnessing increased volatility, with several assets testing crucial support levels. One asset that is currently under close observation is Solana [SOL], which is hovering around the important threshold of $180. This level has become a significant point for traders as they prepare for potential price fluctuations.
Social Activity – An Indicator for Solana’s Price Movements
The social activity surrounding Solana has demonstrated a clear connection to its price changes, as shown in the accompanying graph. Surges in social engagement often come before notable price volatility.
In recent months, heightened discussions about Solana have aligned with upward price movements, hinting at a probable rally driven by sentiment.
Nevertheless, while social activity remains high, it can also serve as a two-edged sword, indicating either excessive market optimism or a likelihood of a reversal.
Traders who are closely watching these patterns should be cautious of sudden shifts in sentiment, particularly if Solana struggles to maintain levels above $180. If social interest continues to rise without price confirmation, it may suggest weakening support and the possibility of further price drops.
Declining Number of Active Wallet Addresses
The recent decrease in the number of active wallet addresses associated with Solana unveiled a concerning pattern. Between early December and late December, active addresses witnessed a sharp decline, plummeting from almost 6 million to slightly above 3.5 million – marking a decline of over 40%.
Although there was a slight rebound in this metric at the beginning of January, it still remains significantly lower than previous peaks, indicating reduced network activity and involvement.
This drop in active user engagement raises worries about diminishing usage and user trust. Historically, significant reductions in active addresses often precede downward pressure on prices, reflecting a decline in demand.
For Solana, maintaining price levels around $180 may depend on reversing this trend. Without a substantial increase in on-chain transactions, the threat of further price decline remains significant.