Solana [SOL], ranked as the fourth-largest cryptocurrency globally, is potentially heading towards a downturn in the upcoming days.
Recent market movements have seen SOL forming a bearish pattern on a lower timeframe, indicating a possible breakdown.
Solana’s Emerging Bearish Patterns
As per analysis from CryptoCrypto, SOL seems to be shaping a bearish head-and-shoulders formation within a four-hour timeframe. While the pattern is not yet fully developed, SOL’s chart has already established a head and one shoulder, with the second shoulder still pending completion.
Given the current market dynamics and level of involvement from traders and investors, there is a high likelihood that this pattern will finalize in the next few hours.
Critical Technical Levels to Monitor
If SOL successfully finalizes the bearish pattern and breaches the neckline at the $230 mark, it could potentially drop by 12% to hit the $200 level in the days ahead.
Counter to this bearish stance, SOL’s Relative Strength Index (RSI) indicates a probable upward surge. With SOL’s RSI hovering at 45, close to oversold conditions, there is room for potential growth.
Downbeat On-Chain Metrics
Complementing the technical analysis, on-chain metrics also reinforce the negative outlook. According to data from the on-chain analytics firm Coinglass, interest from traders and investors in SOL seems to be dwindling.
Coinglass data revealed a 5.4% decrease in SOL’s Open Interest (OI) in the past 24 hours, signifying either liquidation of positions or hesitancy among traders to establish new positions.
Alongside diminished trader participation, SOL’s Spot Inflow/Outflow metrics indicated a modest inflow to exchanges, hinting at potential selling pressure triggered by whales or investors transferring holdings from wallets to exchanges, a move commonly associated with price declines.
At the time of reporting, SOL was trading around $235, exhibiting relative stability with a marginal 0.10% decline over the past day.
Conversely, trading volume witnessed a 17% drop during the same period, indicating reduced engagement from traders and investors amidst the prevailing bearish sentiment.