Solana emerged one of the best performing mega cap altcoins, as the crypto market rallied in the build up to the spot Bitcoin ETF verdict. But, since SOL hit a 2-year peak of $126.1 on Dec. 25, the price has headed south.
On-chain data trends unveil key factors driving the current Solana decline and what price action to anticipate in the week ahead.
Since the turn of the year, Solana network has maintained strong performance in its underlying growth metrics, with network usage and daily active users on a steady rise. However, Solana price fell to $82 on Jan. 22, bringing its weekly time frame losses to the 20% mark.
The Solana price decline has been attributed to bearish sentiment surrounding the broader altcoin markets. TradingView’s TOTAL3 chart sums up the market capitalization of all listed crypto assets excluding Bitcoin (BTC) and Ethereum (ETH).
As depicted below while SOL price has dropped 20% between Jan 14 and Jan 22, the TOTAL3 chart also shows an 8% downtrend.
The TOTAL.3 chart (total crypto market cap excluding BTC & ETH) shows that the global altcoin market has shrunk by $32 billion over the past week. This signals that investor confidence in the sector as a whole has been on a downtrend. As the 8th largest cryptocurrency, it’s not surprising that SOL price has been disproportionately impacted.
Without a significant improvement in market sentiment, SOL could experience more downside.
Drawing insights from the derivatives and market data trends analyzed above, SOL price is likely to experience more downside toward the $75 area the coming days.
The Bollinger bands technical indicators also emphasize this bearish outlook. It shows that, with SOL price currently trading as $82, it has now wobbled below the 20-day Simple Moving Average price of $93.
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