As the broader market sentiment turns bearish, Solana [SOL] finds itself grappling with a significant downturn, hitting a low not seen in the past three months.
Is this simply a short-term adjustment, or are investors starting to doubt the long-range viability of Solana?
Key Support Eroding for Solana
Currently, SOL has dropped by 40% from its highest point since the recent election to $274, aligning with a widespread market correction that has erased close to $450 billion from the cryptocurrency market since the start of the year.
While many major assets struggle to maintain their positions due to supply-demand imbalances, SOL is under even more intense selling pressure.
The market capitalization of Solana has decreased by more than $40 billion, departing from its usual strong performance in the first quarter, where it typically surpasses crucial resistance levels to reach new peaks.
However, in this cycle, SOL has established three successive lower points since its peak, with no significant buying activity to counteract the selling pressure.
Should SOL fail to solidify support at $160, it could slide further towards $130, revisiting the price at the beginning of the election day.
This juncture empowers long-term holders to guide Solana’s recovery through their steadfast belief in the project.
Concerns Mount for Solana’s Market Phase
A notable 22% of SOL’s circulation is under long-term holders (6-12 months), showing minimal changes in their holdings on the chart. This stable accumulation embodies a strong belief in Solana’s future prospects.
Nonetheless, with SOL nearly doubling in value over the last half-year, the 6-12 month holder segment remains a pivotal indicator to monitor for potential shifts in market sentiment.
Following a 2% uptick from its three-month low, Solana has experienced an 8% increase in trading volume, indicative of renewed interest at discounted levels. Yet, it is premature to label $160 as a secure baseline.
The upcoming days will play a crucial role in shaping Solana’s price trajectory.
If the bulls falter in defending this support level, a decline in holding confidence among 6-12 month long-term holders may prompt a panic-driven selloff, exposing Solana to a deeper pullback towards its former support at $130.