One, first break the stagnation: After a 3.83% drop, narrowing between $199-$214, is it 'building a base' or 'preparing to drop'?
Don't be deceived by the 'narrow fluctuations'. This drop from $214 to $199, and then narrowing within the range, seems 'calm' but actually hides two possibilities; the details of the market and technical aspects can reveal the essence.
1. If it is just 'building a base': The market will show 3 'positive signals'.
If the current volatility is 'a pause after previous selling pressure has been released', it is highly likely to rebound next, and 3 details can prove this:
Support level buying pressure hasn't stopped: In the $198-$199 range, there has been a cumulative buying pressure of $4.2 million over the last 4 hours. Each time the price drops to $199.2, there are $500,000-$800,000 mid-sized orders coming in, which are not retail orders, but rather look like institutions are 'secretly accumulating'.
Volume contraction but no significant decline: Although it has dropped by 3.83%, the 24-hour trading volume decreased from $220 million to $180 million, which is a 'volume contraction retracement' — indicating that selling pressure is decreasing, not large funds fleeing.
The technical aspects haven't broken key levels: The price is still above the 50-day moving average ($197), RSI is at the neutral zone of 48, and MACD is only showing weakened momentum without a death cross. All of these are signals that 'the mid-term trend is intact', which is almost identical to SOL's behavior after dropping from $201 to $198 in 2023. It took 2 days to rebound to $213.
In this situation, $199 is more like a 'short-term bottom'. As long as $198 holds, once buying pressure builds up enough strength, it can surge to $204-$210.
2. If it really is 'waiting for a breakdown': The market will show 2 'danger signals'.
If the volatility is due to 'selling pressure not being fully released, preparing to continue to drop', there would be obvious signs of a trend reversal, but so far we haven't seen that.
Danger Signal 1: Volume drops below $198 — If $198 is broken with hourly trading volume over 3 million SOL, it indicates that buying pressure can't hold, and it may drop to $195 or even $190. However, the buying pressure at $198 is still increasing, so there is currently no risk.
Danger Signal 2: Volume-less rebound — If the price rebounds to $202-$204 but the trading volume is lower than during the decline (for example, hourly trading volume below 1.5 million SOL), it indicates that buying pressure lacks momentum. However, currently, when rebounding to $201, the trading volume has slightly increased, leaving room for hope.
So now it leans more towards 'building a base', not 'preparing to drop'. The position at $199 is more like 'a halftime break in the contest between bulls and bears'.
Two, SOL's 'confidence': Dropping 3.83% but still stable relies on ecological 'hard support'.
Don't just focus on the price dropping by 3.83%. SOL stabilizing at $199 without dropping as deeply as other altcoins is due to the 'fundamental strength of the ecosystem' — the enthusiasm for DeFi, NFT, and DApps hasn't diminished, which is key to supporting investor confidence.
1. The 'DeFi + NFT dual engines' haven't stalled, and funds haven't truly withdrawn.
Opening SOL's ecosystem data shows that even though the price has dropped, core business is still growing.
DeFi Locked Value (TVL): Currently still at $14.8 billion, just $200 million less than last week. The daily trading volume of the two leading DEXs, 'Raydium' and 'Orca', remains above $500 million, indicating that DeFi users haven't fled and funds are still circulating within the ecosystem.
NFT Market: The daily trading volume of 'DeGods' and 'Magic Eden' hasn't dropped, and even a new NFT project 'Solarpunk' sold 8,000 pieces on its launch day, with the floor price rising to 0.8 SOL (approximately $159). The enthusiasm among NFT players is still there.
DApp Active Users: The daily average number of active wallets is 620,000, which is 30,000 more than last month. The daily active users of the blockchain game 'Star Atlas' remain stable at over 80,000, indicating that real demand hasn't decreased.
The ecosystem is SOL's 'ballast' — as long as DeFi, NFTs, and DApps are still active, funds won't really leave, and even if the price drops, it can bounce back. This is why SOL is more stable than other altcoins.
2. Institutions haven't fled and are still buying in the $198-$200 range.
More importantly, 'large funds are not panicking' — On-chain data shows that in the last 24 hours, whale addresses holding over 1,000 SOL not only haven't reduced their holdings but instead increased their positions by 120,000 SOL (approximately $23.76 million) in the $198-$200 range, with an average cost of $198.5, which is lower than the current $199.
These whales are not fools; if SOL were really going to drop deeply, they wouldn't be buying at this level. Their willingness to enter now indicates they see support at $198 and believe this dip is an 'opportunity to get in'. Moreover, when SOL previously dropped to $195, these whales were also buying, leading to a subsequent rebound to $214. The current actions are strikingly similar to that time.
Three, the technical aspect 'hides hope': RSI is neutral, MACD hasn't turned bearish, holding $198 can lead to a rebound.
Don't be scared by the '3.83% drop' in superficial data; the technical signals are not that bad and actually hide 'hope for a rebound':
1. Price is above the moving average, and the mid-term trend is intact.
The current price of SOL is $199, still standing above the 50-day moving average ($197) and the 200-day moving average ($185) — the 50-day moving average is the 'lifeline of the short-term trend', while the 200-day moving average is the 'indicator of the long-term trend'. As long as these two moving averages are not broken, the mid-term upward trend remains intact.
Comparing to previous corrections shows: In 2023, SOL dropped from $213 to $195 while standing above the 50-day moving average, then rebounded to $214. In 2024, from $205 to $198, it also didn't break the moving average and quickly surged to $210. The current situation is very similar, with the moving average still providing support; a rebound is just a matter of time.
2. RSI is neutral, and MACD hasn't turned bearish; selling pressure is almost exhausted.
Technical indicators are also releasing 'positive signals':
RSI (Relative Strength Index): Currently at 48, in the neutral zone (30-70). Although it is slightly tilted downwards, it hasn't dropped to the oversold zone at 30, indicating that selling pressure hasn't reached its peak. A slight drop may trigger a rebound.
MACD: Although momentum is weakening, a death cross hasn't formed (the white line hasn't broken below the yellow line), and there hasn't been an increase in green bars, indicating that 'it is just a temporary lack of momentum, not a trend reversal'. It's like a car temporarily slowing down, not stalling.
In 2023, every time SOL's RSI reached the 45-48 range and MACD hadn't turned bearish, a rebound occurred. This time, it is highly likely to be no exception.
Four, $198 support vs $204 resistance: Breaking one determines the direction. What should we do now?
The current market for SOL is focused on the 'support at $198' and 'resistance at $204'. Breaking either one can clarify the direction; don't act randomly before either is broken.
1. Hold $198: The rebound targets $204 first, then $210.
If SOL can hold $198 and signal a 'stable increase in volume' (for example, hourly trading volume over 2.5 million SOL with prices not making new lows), the following rebound will likely occur in two steps:
Step one: First aim for the resistance level of $204 — this is 'the previous support level, now turned into resistance'. However, as long as there is buying pressure with increased volume (hourly trading volume over 3 million SOL), it can be easily broken.
Step two: After breaking through $204, set the target directly at $210 — this is the 'previous small high point'. After breaking through, it can open up space to surge to $214 or even $220.
Just like in 2024, when SOL held $195, it first surged to $205, then to $214, gaining $19. If it holds $198 this time, the increase may not be less than last time.
2. Breaking below $198: It may drop to $195 in the short term, but don't panic.
If SOL breaks below $198 and increases in volume (hourly trading volume over 3.5 million SOL), it may drop to $195 in the short term, but there's no need to panic — $195 is a 'strong support level since June'. The previous two times it dropped to $195, it rebounded, and this time it is highly likely to hold.
Even if it drops to $195, it is a 'better buying opportunity' — the support at $195 is stronger than at $198, and whales are likely to increase their accumulation at this point. By then, entering would mean a lower cost than now.
Five, what should we do now? Three types of people have different strategies, don't act randomly.
Facing SOL's 'narrow volatility', regardless of whether you are 'already holding', 'watching from cash', or 'wanting to buy the dip', there are corresponding strategies. Don't follow emotions.
1. Those already holding positions (entered above $200): Don't cut your losses; set a stop loss at $197.
If you entered between $200-$214, and are currently down $1-$15 per SOL, don't rush to cut losses.
Set a stop loss at $197 (which is $1 below the $198 support, to avoid being stopped out). If it breaks, reduce your position by 50%; if it doesn't break, hold on.
Don’t add to your position: The market is still volatile; adding to your position will only increase risk. It’s better to wait for a breakthrough at $204 before adding more.
Don't stare at the market: After setting a stop loss, do what you need to do. Watching the 1-minute chart fluctuations between $199-$202 will only increase anxiety and lead to erratic trades.
2. For those watching from cash: Wait for 2 signals; don't randomly buy in the $199-$202 range.
If you are in cash, don't buy randomly in the $199-$202 range. Wait for two clear signals:
Buying signal: SOL holds at $198 + increases in volume to above $200 (hourly trading volume over 2.5 million SOL). Enter near $200, set a stop loss at $196, targeting $204-$210.
Chasing buying signal: SOL breaks above $204 with increased volume (hourly trading volume over 3 million SOL), pull back to around $202 to enter, set a stop loss at $199, targeting $210.
Before there's a signal: Stay in cash; cash is the most valuable asset in a volatile market.
3. Those wanting to buy the dip: Use a small position to test, buying 10% in the $198-$199 range.
If you really want to buy the dip, don't go all in. Use a small position of 10% to test the waters.
Entry point: $198-$199, buy up to 10% of your position. For example, if you have $100,000, spend $10,000 to buy.
Stop loss: $196; if it breaks, accept the loss; don't average down.
Target: First look at $202, if reached, reduce by 50%, hold the remaining 50% for $204. If it can't break through, sell everything.
Remember: In a volatile market, buy the dip and take profits of $2-$3; don't be greedy, greed can lead to losses.
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