The Solana network has faced challenges in maintaining its on-chain activity due to declining trading interest. This downturn was initiated by a recent price correction in the crypto market, causing the price of SOL to approach its support levels. Consequently, numerous on-chain indicators have experienced significant drops, raising fears of an imminent sharp fall in the SOL price shortly.
Solana’s Transaction Volume Declines 90%
Solana’s native cryptocurrency, SOL, experienced a decline to its three-week low, reaching $162. This decline came following the announcement of the U.S. Consumer Price Index inflation rate for March, which came in slightly above expectations at 3.5% on a year-over-year basis.
A combination of bearish on-chain metrics impacted SOL’s market performance. These include issues the network faced in handling a surge in transaction requests, declining interest in Solana SPL tokens, and the 90% decline in transaction volume on the Solana network.
Recent on-chain data indicates a significant drop in Solana’s transaction volume, declining from a high of $1.08 million a week ago to a recent trough of just $106 billion, marking an approximate 90% decrease. This sharp decline has contributed to a strong bearish outlook on Solana’s price chart.
There’s a rising sentiment that the recent volatility in SOL’s price, following by a rapid increase and then a decline, was fueled by temporary demand triggered by the memecoin craze and recent airdrops of Solana SPL tokens, rather than foundational on-chain activities within the past few days. This suggests that the price adjustment observed on April 10 was due to a wider downward trend for SOL, further highlighted by its inability to breach the $200 level on March 31.
On-chain trends further indicate a sharp decline in active SOL addresses as the metric dropped from the high of 1.5 million to 1.2 million, showing less engagement from investors and traders recently. This might contribute to the current bearish trend, strengthening the ongoing bearish dominance.
What’s Next For SOL Price?
Investors are struggling to keep Solana’s price above the 20-day Exponential Moving Average (EMA) of $174, signaling strong resistance from sellers at this level. Recently, Solana’s value has seen a significant decline, particularly in the last few hours, with efforts to surpass the $200 mark being defended. Currently, Solana is trading at $173.3, reflecting a decrease of over 0.02% in the past 24 hours.
If the price continues to fall from its current level, the SOL/USDT pair may drop to the critical support level of $162. At this point, it is expected that investors will robustly safeguard this level to prevent further declines, as failing to do so could lead to a drop to $126.
Conversely, a rebound from $162, followed by a rise above the 20-day EMA, could suggest that the trading pair may remain within the $162 to $205 price range for some time. Breaking through the $205 barrier could then initiate a new phase of upward momentum.
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