Solana price forecast: Bearish momentum points to further correction risks
Solana faces bearish momentum as key support levels fail
Solana (SOL) continues its bearish trend, trading below $194 on Friday after a sharp 13% decline this week. The downturn has resulted in over $38 million in liquidations, with $33 million from long positions.
Traders remain cautious as Solana's Total Value Locked (TVL) dropped by more than 7% in a single day, intensifying concerns about further declines.
Solana price trend (Nov 2024 - Dec 2024) Source: TradingView.
Solana dips below key support levels
SOL faced resistance near $230 earlier this week, triggering a 13% drop over two days. The cryptocurrency has since fallen below the $201.85 support level and the 100-day Exponential Moving Average (EMA) at $196. Currently, SOL trades below $194, with technical indicators hinting at a potential decline toward $174.85, which aligns with the 200-day EMA. The Relative Strength Index (RSI) on the daily chart reads 35, reflecting strong bearish momentum.
The recent price drop triggered significant liquidations across the Solana ecosystem, totaling $38.86 million, with the majority coming from long positions. This has heightened Fear, Uncertainty, and Doubt (FUD) among investors, amplifying selling pressure. Additionally, Solana's TVL experienced a sharp decline, dropping from $11.22 billion to $10.35 billion, marking a 7% decrease within 24 hours. Historical data shows similar TVL declines led to price drops exceeding 10%, raising concerns about SOL’s near-term trajectory.
While technical analysis and on-chain metrics signal a bearish outlook, the narrative could shift if SOL manages to recover and close above the $201.85 resistance level. Such a move could drive a rally toward $230, providing a potential lifeline for bulls.
Previously, we discussed Solana's rising momentum driven by the Solaxy ICO and growing DApp revenue, highlighting its potential for long-term expansion.
