Solana (SOL) has been on a rollercoaster ride lately, with a sudden downturn wiping out months of gains in just four short weeks. The unexpected drop has left many investors in a state of panic, particularly those holding onto SOL.
The price of Solana has plummeted to a level not seen in the past five months, sparking concerns about the future of this altcoin.
Support Needed for Solana
The prevailing sentiment surrounding Solana is overwhelmingly pessimistic, given the rising NUPL (Net Unrealized Profit and Loss) metric. This metric indicates a sharp uptick in unrealized losses among investors, fueling widespread fear. With apprehensions growing over further price dips, many investors are choosing to distance themselves from the platform, leading to reduced activity within the Solana ecosystem.
This fear-induced reaction is likely to compound the existing issue of dwindling liquidity, a trend that has been noticeable over the recent weeks. As fewer users engage with the platform, the recovery of Solana's price could face significant obstacles.
Solana's overall macro momentum is also displaying signs of weakening. The number of new addresses on the network has dwindled to a three-month low, signaling a lack of fresh investments in SOL. The waning interest from potential buyers indicates that Solana is losing ground in the market, with new investors hesitant to enter the cryptocurrency arena amidst continued price volatility.
The decline in new addresses is a worrying development, typically suggestive of a lack of enthusiasm and investor faith in the project. Without an influx of new capital, Solana's price may come under additional downward pressure, posing challenges for the cryptocurrency to reclaim its earlier momentum.
Solana's current trading price stands at $140, managing to hold above the crucial support level of $138. Despite this, the rapid descent from $168 to a five-month low has cast doubts on a swift recovery. The sudden price decline has caught investors by surprise, and although the support at $138 remains unbroken, the outlook remains grim.
Solana might persist within a consolidation range between $138 and $161, as seen in the past, but the prevailing bearish sentiment hints at a potential slip for SOL. Should this consolidation phase persist, the price could slide down to $131, putting SOL in a precarious position and prolonging the period of losses for investors.
To reverse the current bearish trend, Solana needs to breach the $168 hurdle and turn it into a strong support level. A breakthrough above this threshold would signal a recovery and help rebuild investor confidence. This move could set Solana back on its upward trajectory, enabling SOL to shake off the recent downturn and resume its bullish run.