Solana (SOL) has encountered significant challenges in its recent price movements, failing to break through the $150 resistance level despite multiple attempts. Over the past few weeks, the altcoin has shown signs of a lack of sustained bullish momentum, with its price hovering around $133. While it has seen a 6% increase in the last 24 hours, the general market sentiment remains cautious, and a breakout above $150 seems unlikely at this stage. However, the price stability in Solana has been largely attributed to strong support from long-term holders, whose accumulation prevents sharp declines and price crashes.

Solana’s Overvaluation and Market Dynamics

One of the key indicators of Solana’s current market condition is its NVT Ratio (Network Value to Transaction Ratio). This ratio measures the market value of Solana against the transaction activity on its blockchain. At present, the NVT Ratio is at a four-month high, signaling that the network’s market value is rising faster than its transaction activity. Historically, such high NVT ratios indicate that the asset may be overvalued, as the network’s utility is not keeping pace with the price appreciation. Overvaluation often leads to price corrections as the market adjusts to the real value of an asset.

If the transaction volume does not show substantial growth in the coming weeks, Solana may face challenges in maintaining its current price levels. A period of stagnation or mild corrections seems plausible unless network activity can demonstrate growth to justify the higher price. Solana’s current valuation has become increasingly disconnected from its blockchain activity, making it vulnerable to potential downtrends unless supported by an increase in transaction volume or fundamental developments.

Long-Term Holders and Their Impact

Despite the signs of overvaluation, Solana is benefiting from the support of long-term holders who are accumulating SOL tokens. A significant drop in “liveliness,” which is a measure of the frequency at which coins are moved from long-term holders, has been observed. This decline indicates that investors who previously sold off their holdings have now shifted their focus to accumulating more tokens. Long-term holders typically exhibit more confidence in the asset and are less likely to sell in a panic, even when the market shows signs of a price dip.

This shift in behavior provides a crucial buffer against major price corrections. The increased accumulation among long-term holders signals confidence in Solana’s future, reducing the likelihood of widespread sell-offs. Consequently, while Solana may face short-term struggles to break through its resistance levels, the strong holder base prevents any sharp declines that could otherwise lead to substantial price crashes.

Solana’s Support Levels and Price Outlook

At the time of writing, Solana is trading at approximately $133. The key resistance for Solana continues to be at the $148 mark, a level it has struggled to surpass for over a month. A successful breakout above this level would be a strong indicator of further bullish momentum, but without enough buying pressure, this remains a distant goal. Conversely, SOL has several key support levels to safeguard against steep declines. The $125 and $118 levels are considered strong support zones, which should provide a cushion in the event of a market downturn.

In a bearish scenario, Solana could drop as low as $109 if broader market conditions worsen. However, the strong accumulation by long-term holders and the growing confidence in the asset suggest that such a drop is unlikely, at least in the short term. If Solana can successfully test $148 as support, the neutral outlook would be invalidated, and the price could head toward higher targets.

Conclusion

Solana’s struggle to break above $150 is largely due to market overvaluation, as indicated by the high NVT Ratio, and the lack of significant transaction activity to support such high valuations. However, strong long-term holder accumulation prevents major price crashes, offering some stability in the current environment. While short-term price action suggests that Solana will likely remain below $150, key support levels provide a foundation for further price movement. How the market reacts in the coming weeks will be crucial for Solana’s future price trajectory, with both technical and fundamental factors playing significant roles in determining its next move.