Solana (SOL) has dropped below $90 for the first time in 2024, hitting a recent low of around $89 and showcasing a staggering 16% decline in just a week. This downward trend reflects broader turbulence in the cryptocurrency market with Bitcoin slipping under $73,000 and Ethereum trading below $2,100. Solana’s inability to maintain support above the $100 threshold, especially after breaking through several support zones, has left investors on edge.
Even in the face of these price drops, Solana’s network activity offers a stark contrast to its price performance. On January 30, the blockchain registered a record 148 million transactions in a single day, marking one of the highest daily transaction counts in its history. This surge illustrates the persistent on-chain activity happening within the Solana ecosystem, as users continue to engage with the platform despite bearish market sentiment among traders.
Institutional interest in Solana appears to be steadfast, particularly through the emerging market of tokenized stocks. The market capitalization of these products on Solana has reached an impressive $230 million, demonstrating ongoing institutional investment interest amid rough price conditions. Companies like WisdomTree are expanding their tokenized investment offerings to include the Solana network, further cementing its role as a favorable platform for institutional-grade operations.
Additionally, new use cases are emerging as GustoHQ, a payroll platform, adopts USDC on Solana, facilitating real-time settlement for foreign fund transfers. This kind of innovative implementation showcases the increasing real-world utility of Solana, even as its market capitalization flounders.
Weak ETF Flows Indicate Hesitance
Despite the robust on-chain activity, US Solana ETF inflows have remained tepid, averaging less than $9 million daily over the past three weeks. Notably, on February 2, the inflows dropped significantly to just $1.24 million—a steep decline from $5.58 million a day prior. On certain days, inflows even reversed into outflows, suggesting a cautious market sentiment surrounding Solana ETFs.
The derivatives market further illustrates bearish sentiment, with Solana’s Open Interest recently decreasing by 1.24% to $6.37 billion. Notably, long liquidations have overshadowed corresponding short liquidations, indicating that many traders expect further declines. The funding rate for Solana has also turned negative at -0.0238, revealing a broader expectation of continued price weakness.
Technical Indicators Suggest Continued Decline
Currently, SOL is trading below its 50-day, 100-day, and 200-day exponential moving averages, with the Relative Strength Index (RSI) measuring at 28—a clear indication of an oversold market. If SOL falls beneath the $95 mark, analysts target $85 as the next potential support level, with risks of dipping further down towards $82 if bearish trends persist.
Immediate resistance is observed at $93, while critical levels rest at $97 and notable bearish trendlines hover around $98. For a bullish reversal, SOL would need to reclaim the $100 level and overcome $102 to signal a more positive outlook. Analysts have pointed out that if SOL can break above $119, the possibility of reaching $150 becomes conceivable in the medium term. However, current data trends hint at heightened risks for continued price declines.
Despite the immediate price struggles, Standard Chartered maintains a promising long-term forecast for Solana, asserting a potential evolution into a $2,000 asset by 2030 as the platform advances its utility in microtransactions and artificial intelligence applications.
The fluctuations in Solana’s price illustrate the intricate balance between market sentiment and real-world application, a juxtaposition that will undoubtedly shape its trajectory in the months and years ahead.
