Solana Price Faces Pullback: Can It Reclaim Bullish Momentum Amidst Bitcoin’s Decline?
Solana (SOL) saw a notable price drop from $164 on Friday to $141 over the low-volatility weekend, reflecting a 14% loss. This retracement is primarily linked to a marked decline in traditional on-chain activity, including both active and new addresses. As Bitcoin slips below the $60,000 mark, the question remains: will SOL’s price rebound and regain its bullish momentum?
Will the Solana ETF Ignite a Bullish Rally?
On Wednesday, August 7th, the Brazilian Securities and Exchange Commission (CVM) approved Brazil’s first Solana ETF. This move grants Brazilian investors early access to this diversified Solana (SOL) cryptocurrency product, ahead of U.S. investors, where similar ETF applications are still under review by the SEC with uncertain outcomes.
According to a recent report by Exame, QR Asset and Vortx will manage the ETF, pending final approval from the Brazilian stock exchange (B3). This ETF will track the CME CF Solana Dollar Reference Rate, supported by CF Benchmarks and the Chicago Mercantile Exchange (CME).
The anticipated launch is expected to draw significant inflows into Solana from traditional markets, potentially boosting demand for SOL.
Solana Price Signals Bearish Reversal
While many major altcoins have experienced notable recoveries this week—mirroring Bitcoin’s rise from $49,600 to $58,398 (an 11% increase)—Solana’s price surged from $110 to $163 before settling back to $142. Consequently, its market capitalization has diminished to $66.6 billion.
The pullback below key daily Exponential Moving Averages (20, 50, and 100) may accelerate selling pressure, possibly leading to a more prolonged downturn. Should market correction concerns persist, a breach below the $150 support could see SOL’s price plummet 16.5% to $126 as it tests the support of a triangle pattern.
Market Struggles as User Engagement Declines
A decline in key on-chain metrics reinforces a bearish outlook for Solana. Data from TheBlock analytics indicates a drop in new addresses interacting with the network from 1.27 million on August 1st to 980,680, marking a 22.79% reduction.
Additionally, active addresses decreased from 2.09 million to 1.6 million, a 23.44% decline. These substantial drops in fundamental on-chain metrics suggest diminishing user engagement, potentially signaling further declines in SOL’s market value if the trend continues.
Conversely, Solana’s price exhibits a mid-term sideways trend on the daily chart, forming a symmetrical triangle pattern. This pattern, characterized by converging trendlines, suggests temporary consolidation as the prevailing trend seeks to regain momentum.
The Average Directional Index (ADX) below 25% indicates that sellers are losing control of the asset.
If the price rebounds from the triangle support, it could prolong the sideways trend and prevent a major correction. A successful rebound might enable buyers to breach the upper trendline and potentially drive Solana’s price above the psychological $200 level.
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