After a bullish run between September and December 2023, the native token of the Solana network, SOL, has been declining steadily over the last three weeks.
Ranked fifth in market capitalization, Solana initially showed remarkable performance, surging by 530% since October 2023 and gaining 106% in December alone.
Many chalked down the December rally to the fear of missing out, or “FOMO,” surrounding the Solana SPL token airdrops, with tokens like Jito (JTO), BONK, and Dogwifhat (WIF) contributing.
However, the tide shifted since the new year began, with BONK experiencing a 15% correction and JTO declining by 19% between Jan. 17 and Jan. 18. According to analysts, the correction was partly due to excessive optimism regarding airdrop expectations.
Some launches took longer than anticipated, and the boost provided to decentralized applications (dapps) was often short-lived.
Apart from a Jan. 2 spike that caused SOL’s price to surpass $116, the coin has not changed hands for more than $107 in recent times.
On Jan. 19, SOL faced a 7% decline, reaching a low of $95.05 per data from CoinGecko.
It marked a continuation of the persistent rejection from the $100 level analysts have observed over the past fortnight.
Token price down, TVL up
As of the latest data, SOL is priced at $92.14, reflecting a 2.1% decrease in the last 24 hours. Its circulating supply is 432.9 million SOL, contributing to a 24-hour trading volume of $1.418 billion.
Per data from DefiLlama, the total value locked (TVL) in SOL tokens peaked at 15.4 million on Dec. 19, 2023, indicating a 60% growth compared to the previous month.
Solana has also demonstrated growth in network activity, particularly in transactions and volumes. In fact, despite an 8.5% decline in transactions and active dapps users in the last seven days, Solana’s dapps volume reached $594 million, leading with 72.3 million transactions.
The coin’s all-time high (ATH) of $258.9 serves as a reference point for its historical performance. While the current price is notably lower, the positive sentiment surrounding the project is evident, with a Fear-Greed Index of 64, indicating a prevailing sense of greed among investors.
Mixed technical indicators
However, technical analysis paints a mixed picture. While SOL remains above its 50-day and 200-day exponential moving averages, indicating a golden crossover and a bullish sentiment of 85%, recent price action suggests a potential reversal.
Furthermore, SOL’s relative strength index (RSI) at 43.74 suggests a bearish market, while the moving average convergence and divergence (MACD), at 55.59, indicates an upward trend.
Analysts had initially anticipated a continued bullish run, supported by optimistic price predictions for 2024 ranging between $250 to $300.
However, the general price dip witnessed since the beginning of the year and the increased selling pressure suggest a shift in control towards the bears.
Solana’s recent price action also reflects a tug-of-war between bulls and bears. The rejection at resistance levels and the overall market sentiment indicate a cautious stance among investors, with some, like Toni Ghinea foreseeing a potential drop to $60 by late 2024.
If Ghinea’s prediction plays out, then it is expected to shift sentiment, leading to the SOL market experiencing increased bearish pressure.
