Solana (SOL) has been on a sharp downtrend, plunging from its previous support at $200 to touch a low of $130—the weakest level in five months. The steep decline comes amid a broader market downturn, where leading cryptocurrencies have struggled to maintain key levels.

The TD Sequential indicator, a widely used technical tool for spotting trend reversals, has flashed a strong buy signal, hinting at a potential recovery. However, the lack of buying pressure raises concerns that this signal might not translate into an actual price rebound.

Adding to the uncertainty, Solana’s trading volume has plummeted by 61%, suggesting a lack of market participation. This weak demand raises the question—can SOL bulls step up, or is this just a brief pause before another leg down?

Technical and Market Indicators Flash Mixed Signals

Solana has witnessed a steep 30% drop in the past month as volatility across the cryptocurrency market continues to shake investor confidence. Several high-cap altcoins have also lost crucial support levels, adding to the overall bearish sentiment.

However, some positive factors could help support Solana’s price action:

1. Historical Demand Zone: SOL has found support around this price range before, attracting dip buyers. If history repeats itself, this could lead to a short-term bounce.
2. Bitcoin’s Impact: Bitcoin (BTC) has been consolidating, which could encourage investors to rotate funds into altcoins like Solana. If BTC remains stable, SOL could benefit from renewed demand.
3. TD Sequential Buy Signal: The indicator suggests a potential bullish reversal, giving traders a reason to watch for a rebound.

Will Solana Bulls Defend the Zone?

Despite the bullish signal from TD Sequential, weak market participation raises red flags. Trading volume has tumbled 61%, indicating that traders are hesitant to accumulate SOL at these levels. A strong buy signal typically triggers a price rebound, but in this case, the response has been muted.

Additionally, Solana’s SOL/BTC pair has plunged to a two-year low, marking this cycle as one of its weakest phases yet. Many investors remain on the sidelines, waiting for clear signs of accumulation before re-entering the market.

Open Interest and Liquidation Risks

Solana’s Open Interest (OI) has edged up 1.63% to $3.95 billion, signaling that some traders are still engaged. However, this rise in OI comes with weak accumulation, making it a potential bull trap rather than a sign of sustained recovery.

Just last week, Solana’s OI peaked at $5.31 billion when the price was near $180. But within a day, selling pressure wiped out over 20% of those gains, dragging OI down to $4.20 billion. The drop in OI suggests that many traders liquidated their positions rather than holding for long-term gains.

Possible Scenarios for Solana

Solana remains at a critical crossroads, with two possible outcomes:

1. Bullish Scenario: If dip buyers step in and trading volume recovers, SOL could reclaim $150 and aim for $160–$180 in the short term. BTC’s stability and improved sentiment across the market would play a crucial role in this scenario.
2. Bearish Scenario: If the lack of buying pressure continues, SOL risks falling below $130, possibly testing $110 as the next support level. A deeper correction could lead to further losses, especially if broader market conditions remain bearish.

Final Thoughts

Solana’s price action remains highly uncertain, with mixed signals from technical indicators and market sentiment. While the TD Sequential indicator suggests a reversal, weak volume and fragile investor confidence indicate a lack of conviction in a sustained recovery.

For SOL to regain strength, trading volume must increase, and Bitcoin’s price stability must provide a supportive environment for altcoins. Until then, Solana bulls have a tough challenge ahead to defend the $130 support zone and prevent a deeper correction.