As a seasoned researcher with a knack for deciphering cryptocurrency market trends, I find myself closely watching Solana’s current predicament. Having navigated through numerous bull and bear markets, I can attest that this particular downturn bears a striking resemblance to the turbulent times of yesteryears.
At the close of August, Solana, a well-known cryptocurrency, experienced a substantial decrease in weekly return of approximately 19.14%. This performance represents one of the second-worst weekly performances for Solana in the year 2024. A steeper decline of around 25.19% was seen in July preceding this downturn.
The derivatives market has been particularly influential in driving the current price dynamics.
During a dip in the value of cryptocurrencies, the derivatives market has become particularly significant. Just last week, there was a sudden 12% decrease in Solana’s open interest (OI) within a 24-hour period, coinciding with a drop in its price below $150.
Even though the prices dropped more, it’s worth noting that OI experienced an uptick of 20%. This increase in a falling market indicates that futures traders might be actively taking short positions aggressively.
In simpler terms, the pessimistic view on Solana is being reinforced as its funding rate has been negative for an extended period in 2024, currently at -0.001. This prolonged negativity, which is the lowest this year, suggests a dominant bearish mood among traders.
As a crypto investor, I’ve noticed that on-chain data for Solana indicates a drop in activity recently. According to Dune Analytics, the weekly decentralized exchange (DEX) volume has reached a six-month low of approximately $7.7 billion.
Previously this year, Solana often exceeded Ethereum in daily decentralized exchange (DEX) trade volumes and hit more than $3 billion in 24-hour trading volume. Lately, the market conditions haven’t been overly supportive.
In the year 2024, Solana displayed a strong relationship with Bitcoin, a connection that had earlier enabled Solana to surpass Bitcoin during the first quarter.
Despite a stronger association, the ongoing market trends are causing Solana to experience more significant decreases compared to Bitcoin. Bluntz_Capital, an individual trader, has shared on social media his view that the SOL/BTC pair might continue to fall, potentially reaching lower support thresholds.
Right now, Solana’s crucial support level is around $127. If the price drops below this, it might target $110 next, which is an important liquidity zone. A bounce back from $110 could indicate a potential upward trend, offering some relief to investors.
If the bearish trends continue through September, Solana might revisit support areas ranging from $98 to $104. This could trigger a reassessment of its market standing as we move further into the year.
The current market trends highlight a crucial phase for Solana, where it’s facing downward pressures and assessing vital resistance points to decide its course for the rest of the year.
Also Read: Solana Drops to $137 as Whales Unstake, Fueling Market Volatility
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2024-09-02 21:43