As uncertainty spreads across the market, resulting in a decline for numerous cryptocurrencies post-election, Solana [SOL] finds itself amidst heavy selling pressure, leading to a three-month low.
The question that arises is whether this downturn is merely a temporary setback or if investors are beginning to doubt its long-term viability.
Solana Struggles to Maintain Crucial Support Levels
Currently, SOL has dropped by 40% from its highest point after the election, standing at $274, coinciding with a general market correction that has erased nearly $450 billion in crypto values since the beginning of the year.
While many major assets are facing challenges below significant psychological price points due to discrepancies in supply and demand, SOL is encountering even more pronounced selling pressure.
Market capitalization for Solana has decreased by over $40 billion, diverging from its usual strong performance in the first quarter, where it typically surpasses major resistance levels to achieve new peaks.
However, in a departure from previous patterns, SOL has now recorded three consecutive lower points since its peak, with no substantial buying activity to counteract the pressure from sellers.
If SOL fails to solidify $160 as a strong support level, there is a risk of a further decline towards $130, reaching back to its initial price on election day.
This situation places significant responsibility on long-term holders, as their confidence will play a crucial role in determining Solana’s recovery.
SOL Faces Potential Shift into Distribution Phase
Long-term holders (6-12 months) currently hold more than 22% of SOL’s total supply, with their ownership showing minimal fluctuations. This consistent accumulation indicates a firm belief in Solana’s long-term prospects.
Nevertheless, considering SOL almost doubled in value over the last half-year, the group of holders within the 6-12 month range is a key indicator to monitor for any shifts in market sentiment.
While SOL has experienced a 2% upturn from its recent low, along with an 8% increase in trading volume indicating renewed interest at discounted levels, it is premature to declare $160 as a solid bottom.
The upcoming days will be pivotal in shaping Solana’s price trajectory.
If buyers do not succeed in defending this crucial support level, a potential decrease in confidence among long-term holders could trigger panic selling, leaving Solana vulnerable to a deeper decline towards its prior support at $130.