Solana (SOL) has underperformed in recent weeks, with the current price hovering around $125. Over the past month, SOL has fallen 35%, and nearly 45% over the past quarter. Although there was a brief attempt at recovery, market conditions remain uncertain, raising the question: Can Solana recover, and what does the future hold? The following analysis will examine several dimensions.
Market news and price drivers:
Several external factors are affecting Solana's price. The primary reason for the recent decline is the ongoing liquidation of FTX assets, which includes a significant amount of SOL. This has added immense selling pressure to the market. Since November, over 8 million SOL tokens have been unstaked, raising concerns that further sell-offs could continue to affect Solana's price.
Meanwhile, the SIMD-228 proposal was not passed, thwarting the inflation halving plan. This proposal aimed to reduce Solana's inflation rate from the current 4.7% by 80%. However, despite receiving 61.39% in favor, it failed to meet the 66.67% threshold required for passage, resulting in the proposal being rejected. Smaller validators (holding less than 500,000 SOL) generally opposed it, while larger holders tended to support it, reflecting divisions within the community. This outcome may bring downward pressure on SOL prices in the short term, as inflation remains unchanged and market supply pressures persist.
RSI Indicator:
The Relative Strength Index (RSI) helps determine whether an asset is overbought or oversold. Currently, Solana's RSI(14) is 38, slightly up from yesterday's 36, but almost unchanged from a week ago at 39. The short-term RSI(7) shows a similar pattern, at 39 today, up from 35 yesterday. These readings indicate that while Solana is close to an oversold condition, there are currently no clear reversal signs.
MFI:
The Money Flow Index (MFI) combines price and volume to measure buying pressure. Solana's MFI(14) is 48, down from yesterday's 53 but slightly above a week ago's 43. This volatility suggests that while there is some buying activity, it is not enough to change market sentiment.
Moving Averages:
Solana's moving averages continue to trend downward. The SMA(9) and EMA(9) are both at 130.0, while the SMA(26) is at 147.0, and the EMA(26) is at 148.0. Both short-term and long-term moving averages are above the current price, indicating that bearish momentum remains dominant.
Bollinger Bands:
Bollinger Bands help assess volatility and potential breakout areas. The upper band is at 168.0, and the lower band is at 111.0. Since Solana's price is closer to the lower band, this may indicate an oversold condition. However, this also highlights increased market volatility, suggesting that further declines are still possible.
Relative Performance: (ETH)
The SOL/ETH ratio is currently 0.0664, up 2% over the past seven days, but down 8.5% over the past month. While Solana has slightly outperformed Ethereum in the short term, its long-term trend remains weak.
Overall, Solana's technical indicators present a mixed picture. On one hand, the RSI and Bollinger Bands indicate that Solana is nearing an oversold condition, which could lead to a temporary rebound. However, moving averages, trend indicators, and trading volume suggest that bearish momentum remains dominant. The ongoing liquidation of FTX assets further complicates the outlook.
On the regulatory front, there is some positive news - a Solana ETF has been filed, which, if approved, could attract institutional investment and provide price stability.
While a rebound may be possible in the short term, there are currently no clear reversal signals. Before selling pressure eases and trading volume recovers, Solana may struggle to break through key resistance levels.