Solana Drops Over 10%: Uncovering the Reasons Behind SOL’s Price Crash

The bears initially drove Solana (SOL) below the $126 support level by $153 but were unable to sustain these lower levels, suggesting a rebound driven by bulls. The SOL/USDT pair has now reached the 20-day EMA ($145), a key resistance point. If buyers can push past this level, the pair could advance towards the overhead resistance at $162, where selling pressure from bears might emerge.

On the downside, the critical support level to monitor is $126. If the price declines from the 20-day EMA and breaks below $126, it could signal the beginning of a new downtrend, potentially dragging the pair down to $100.

Solana Price Analysis and Market Sentiment

Centralization Concerns

Solana, known for its speed and efficiency, has faced criticism for its high centralization. This centralization increases the network’s vulnerability to attacks and outages, which has negatively impacted investor confidence.

Decreasing DApp Usage

Decentralized applications (DApps) are crucial to the Solana ecosystem, driving user activity and network engagement. A decline in DApp usage suggests a potential drop in interest or trust, contributing to the recent price decline.

Waning Interest from Derivatives Traders

Derivatives such as futures and options allow traders to speculate on price movements. A decrease in interest in these products may indicate that traders expect further declines in Solana’s price.

Technical Resistance

Solana has struggled to break through the $190 mark, encountering multiple rejections. This resistance has led to a contraction of the Bollinger Bands and a subsequent drop below average price levels.

Solana(SOL) Index Daily Price Chart

Source: TradingView, prepared by FX4Today Team

Solana’s Current Price Performance

Currently, Solana (SOL) is trading around $150, experiencing a downward momentum of over 8% in the last 24 hours. Open interest (OI) in SOL has also dropped by more than 8%, reflecting fear and reduced interest among traders and investors. This sentiment has led to significant liquidations:

• Liquidation Overview: In the past 24 hours, over $22.44 million in long and short positions have been liquidated, with long positions accounting for the majority due to the bearish market.

Solana Price Breaks Support Levels

On August 3, 2024, Solana experienced a significant decline of over 8% within 24 hours, breaking through the critical support level of $157. This breach has shifted market sentiment to bearish, with SOL now heading towards the $125 mark. Contributing factors include:

• Support Level Breakdown: The breakdown of the $157 support level has intensified bearish sentiment, pushing SOL to lower levels.
• Impact of Major Cryptocurrencies: The negative performance of major assets like Bitcoin (BTC) and Ethereum (ETH) has also influenced the decline in SOL’s price.

Solana Price Prediction

Despite the recent liquidations, the key levels to watch for SOL are $146 on the lower side and $162 on the higher side. Market sentiment will be crucial in determining whether SOL continues to decline or recovers. Technical analysis offers further insights:

• Bearish Signals: Technical analysis indicates SOL breaking below the crucial support and the 200 Exponential Moving Average (EMA) on a 4-hour time frame, signaling potential bearishness.
• Potential Support Levels: Historical data and price momentum suggest that SOL could approach $143 and $125 in the coming days, which may act as support levels.

Solana Future

The recent drop in Solana’s price is attributed to concerns about centralization, decreasing DApp usage, waning interest from derivatives traders, and technical resistance. The breach of critical support levels and prevailing bearish sentiment have exacerbated the situation. However, potential technical improvements and renewed investor interest could reverse this trend. Investors should closely monitor these developments and market sentiment to make informed decisions.