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Solana has struggled to maintain its momentum since peaking at $206 on July 22. The coin has dropped 14% in the past week alone, reflecting a decline in confidence among short-term investors.

However, on-chain data suggests that the coin may see a short-term recovery, with early signs indicating that a change in sentiment could lead to a recovery in upcoming trading sessions.

Long-term investors are doubling their investments in Solana.

While short-term traders are selling, long-term holders (LTH) are returning to accumulate. This change in behavior is clearly reflected in the Solana Vitality Index, which has been steadily declining since July 25.

According to Glassnode, the index, which tracks the movement of previously inactive tokens, dropped to a weekly low of 0.76 yesterday, confirming the decline in SOL LTH selling activity.

Solana Vitality. Source: Glassnode

The activity index tracks the volatility of long-held currencies by calculating the ratio of coin destruction days to total accumulation days. When this index rises, it indicates the transfer or sale of many inactive coins, which usually signals profit-taking from long-held coins. Conversely, as is the case with SOL, when this index declines, it indicates that these investors are withdrawing their assets from exchanges and prefer to hold them.

Moreover, since July 30, the net position change for SOL has shown a steady increase, indicating the transfer of more coins to long-term storage, despite the asset's poor price performance.

Net position change of SOL stock holders. Source: Glassnode

Glassnode data shows that this metric, which measures the change in the supply of cryptocurrencies over a 30-day period, has risen by 102% over the past four days. When this metric rises in such a way, it shows that cryptocurrency users are accumulating more coins than they are selling.

Solana traders are selling at a loss - have we finally reached the bottom?

The continuous decline in the realized profit/loss ratio for SOL reinforces positive expectations. On August 2, the metric closed at a 30-day low of 0.15, indicating that many traders who exited their positions continued to incur losses.

Actual profit/loss ratio for SOL. Source: Glassnode

Traditionally, markets tend to stabilize when most participants sell below cost. With fewer coin holders willing to sell their tokens at a loss, selling pressure may ease, paving the way for SOL to reach a local bottom before any bullish catalysts trigger a recovery.

Solana is on hold - support at $158 is facing a serious test.

SOL is trading at $160.55 at the time of writing, stabilizing above the key support level of $158.80. If buying pressure increases, SOL may begin an upward trend toward $176.33.

SOL price analysis. Source: TradingView

However, if selling continues and the support level weakens, the price of SOL may drop to $145.90.

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