Over the past six weeks, Solana [SOL] has been undergoing a period of retracement following its failure to break past the $260 mark. While there was noticeable social activity surrounding the asset, the decreasing number of active addresses has raised concerns. Notably, Pumpfun recently moved $21 million worth of SOL to the centralized exchange Kraken, sparking fears of short-term selling pressure.
An analysis of its MVRV ratio has highlighted a potential opportunity for buyers. Concurrently, the price is currently hovering just above a key demand area that previously acted as strong resistance back in mid-2024.
Solana’s Downtrend Persists in Daily Timeframe
The overall market downturn in recent weeks following the November surge has adversely impacted SOL. With Bitcoin [BTC] dropping to $89.2k on 13 January, it was surprising that Solana managed to hold on to the $180 support level amidst the bearish sentiment.
The OBV has been steadily declining since November, despite attempts by buyers to defend the price. This suggests that the demand zone may soon be breached unless there is a shift towards a more bullish sentiment across the market.
The 20 and 50-period moving averages have been signaling potential reversal points. Currently, they indicate bearish momentum, with the slower moving average acting as immediate resistance.
The price action further reflects this bearish narrative. In order for SOL to change its daily structure to bullish, it must surpass the $218.2 lower high established just over a week ago.
Short-term Outlook Remains Bearish
An hourly chart analysis from Coinalyze also reveals a lack of confidence in Solana’s short-term bullish prospects. While there was a recent bounce from $170 in the past 24 hours, accompanied by an increase in Open Interest, this uptick was insufficient to alter the prevailing neutral sentiment characterized by speculative inactivity.
A similar sentiment is reflected in the spot CVD indicator, which has been forming lower highs over the past week. A reversal in this downward trend would signal a resurgence in buyer dominance.
Disclaimer: The information provided is the writer’s personal opinion and should not be considered financial, investment, or trading advice.