Solana has struggled to maintain its upward momentum since reaching a cycle high of $206 on July 22. Just in the past week, this asset has dropped 14%, reflecting declining confidence among short-term investors.
However, on-chain data indicates that this coin may witness a short-term recovery, with initial signs suggesting that a change in sentiment could drive a recovery in upcoming trading sessions.
Long-term Holders are Doubling Their Investment in Solana
While short-term traders are selling off, long-term holders (LTH) are returning to an accumulation state. This behavioral shift is clearly reflected in Solana's Liveliness index, which has steadily decreased since July 25.
According to Glassnode, this index, which tracks the movement of previously inactive tokens, has dropped to a weekly low of 0.76 yesterday, confirming a decrease in the selling activity of SOL's long-term holders (LTH).
The Liveliness index tracks the movement of long-held tokens by calculating the ratio of the number of days coins are destroyed to the total number of days coins are accumulated. When this index rises, it indicates that many inactive tokens are being moved or sold, often signaling profit-taking by LTHs. Conversely, similar to SOL, when this index decreases, it shows that these investors are moving their assets off exchanges and choosing to hold.
Moreover, since July 30, the Change in Net Debt Position of SOL has recorded a steady increase. This confirms that more and more coins are being moved into long-term storage, despite the asset's lackluster price performance.
Data from Glassnode shows that this index, which measures the change in supply held by LTHs over 30 days, has increased by 102% in the past four days. When this index rises like that, it indicates that LTHs are accumulating more coins than they are selling.
Solana Traders are Selling at a Loss—Has the Bottom Finally Formed?
The Realized Profit/Loss ratio of SOL has been continuously decreasing, reinforcing the bullish outlook mentioned above. On-chain data shows this index closed at a 30-day low of 0.15 on August 2, indicating that many traders who exited positions are still facing losses.
Traditionally, the market tends to stabilize when most participants sell below their cost basis. With the number of holders willing to sell their tokens at smaller losses, selling pressure may ease, paving the way for SOL to find a local bottom before any bullish catalysts that could trigger a recovery.
Solana Hanging in the Balance—Support at $158 Faces Serious Challenge
SOL is trading at $160.55 at the time of writing, holding above the critical support level of $158.80. If buying pressure increases, SOL could begin to reverse upwards and aim for $176.33.
However, if the sell-off continues and the support threshold weakens, SOL's price could drop to $145.90.
