Solana has experienced a notable wave of profit-taking after hitting an all-time high of $295.83 on January 19, leading to a drop in its price to multi-month lows, currently trading at levels last seen in October.
Despite this, on-chain data and key technical indicators are signaling a potential recovery on the horizon.
Solana Enters Capitulation Phase—What’s Next for SOL?
An analysis of the SOL/USD one-day chart reveals that the coin's Relative Strength Index (RSI) has fallen below the 30 level for the first time since June 2023, signaling extreme oversold conditions and possibly hinting at a forthcoming price correction.
When an asset’s RSI dips below 30, it is considered oversold, often indicating a potential reversal or price bounce as traders look for buying opportunities at low price points. Historically, such oversold scenarios have preceded significant rebounds.
Therefore, SOL could be poised for an upswing if investors interpret the RSI drop as a buying signal and increase their accumulation of the coin.
Further supporting the likelihood of a short-term recovery in SOL's price is the prevailing negative market sentiment. Noted crypto analyst Miles Deutscher recently highlighted the altcoin's extreme bearish sentiment, the lowest seen in over a year since it reclaimed the $100 price level.
According to Deutscher, after its prolonged dominance as a top performer, SOL is now undergoing a capitulation phase. Capitulation signifies a stage where investors, fatigued by prolonged losses, start panic-selling their holdings, often marking a potential market bottom.
As the weak hands exit the market, selling pressure lessens, potentially paving the way for a comeback if bargain-hunting buyers step in.
SOL Nears Crucial Support Level—Will Bulls Drive It to $200?
Currently trading at $141.67, just above the $136.62 support level, an uptick in buying pressure could reinforce this level, pushing SOL’s price towards $182.31, a significant resistance zone.
A successful breakthrough at this level could propel the coin's price beyond $200, reaching $222.14.
Conversely, if the current downtrend persists, SOL's price might retreat to $120.72.