Solana’s Recent Performance

Solana is trading around $139, having experienced a nearly 4% decline in the past 24 hours. This drop comes as part of a broader bearish trend affecting the cryptocurrency market. Solana has recorded one of the largest declines among the top ten cryptocurrencies by market capitalization, with trading volumes also down by 12% according to CoinMarketCap data. This reduced trading volume indicates a lack of market interest and suggests that traders are losing confidence in the asset.

Technical Indicators Reflect Weakening Momentum

Technical indicators reveal a weakening of buying momentum for Solana. The Chaikin Money Flow (CMF) on the four-hour chart has been consistently negative since the beginning of the week. The CMF measures the buying and selling pressure over time, and its negative trend suggests that selling pressure is prevailing, with buyers not stepping in to counteract it.

Additionally, the Relative Strength Index (RSI) is currently at 33, indicating that the asset is in bearish territory. The RSI, which gauges the magnitude of recent price changes to evaluate overbought or oversold conditions, has been forming lower lows over the past week. This pattern underscores the prevailing bearish sentiment. However, there is a glimmer of hope as the RSI attempts a crossover above the signal line, which could suggest a potential reversal if buying pressure increases.

Key Levels to Watch

Solana is testing a crucial multi-month support level at $138. This level has held firm since mid-August, providing a baseline for the asset’s price action. Should Solana bounce off this support, the next immediate resistance to watch is at $146, corresponding to the 0.382 Fibonacci retracement level. Breaking above this resistance could indicate a potential recovery.

Further resistance is seen at $152. A successful breach of this level would signal a confirmed uptrend. If Solana fails to maintain its position above the $138 support, it may consolidate within a range before determining its next significant move. This consolidation could see Solana trading sideways until a clear trend emerges.

Positive On-Chain Metrics Despite Price Struggles

Despite the recent price struggles, on-chain data for Solana presents a more optimistic view. Solana’s development activity has surged by 33% month-over-month, indicating robust growth and ongoing improvements within the network. This increase in development activity is a positive sign of the network’s long-term potential and progress.

Additionally, data from DeFiLlama reveals an increase of over $1 billion in Solana’s Total Value Locked (TVL) over the past month. TVL measures the total value of assets locked in decentralized finance (DeFi) protocols on the Solana network. This growth in TVL suggests that despite price headwinds, there is increasing interest and engagement within Solana’s DeFi ecosystem.

Market Sentiment and Trader Behavior

Even with these positive on-chain metrics, sentiment among traders remains subdued. The Long/Short Ratio on Coinglass indicates that short traders have been dominating Solana’s price action for most of the week. This ratio reflects the proportion of long positions versus short positions in the market. A ratio below 1 signifies that short positions are outnumbering long ones, highlighting a bearish outlook among traders.

Conclusion

Solana is at a critical juncture as it tests the $138 support level amid a challenging market environment. Technical indicators suggest that buying interest is currently insufficient to counteract the prevailing selling pressure. However, positive developments in development activity and TVL provide a silver lining, indicating that the network is making progress despite the price difficulties.