Will Solana Price Drop Below $140 Despite ETF Buzz?

NAIROBI (CoinChapter.com) — In June 2024, Solana’s native token, SOL, experienced significant price fluctuations. SOL closed at $144, after reaching a high of $175 on June 5 and a low of $124 on June 24. Internal network issues and market conditions contributed to this volatility.

On July 2-3, SOL decreased by 8.5%, retesting the $140 support level and erasing gains from the previous three days, which had peaked at $154.80. By mid-June, SOL approached $142, marking a 23% decline over three months, while the broader cryptocurrency market lost 9% in the same period.

Solana Finds Temporary Relief in ETF Filings

Despite these challenges, SOL experienced a brief bullish trend at the end of June. This uptick followed VanEck’s and 21Shares’ filings for the first spot Solana exchange-traded funds (ETFs) in the U.S. on June 27 and 28.

VanEck’s filing caused a 6% spike in SOL’s price, temporarily boosting market sentiment dampened by fears of a broad selloff due to Mt. Gox repayments. SOL’s cumulative volume delta (CVD) registered a net positive $29 million over the past week, driven by a surge in spot buying on Coinbase.

However, the market impact of the ETF filings was limited. The ETH to SOL ratio fell sharply in March, indicating SOL’s outperformance, but reversed after ETH’s ETF approval in the U.S. and remained flat despite the SOL ETF filings. The impact on derivative markets also fizzled out, with SOL’s volume-weighted funding rate and open interest returning to neutral levels, indicating a lack of sustained bullish demand.

On-Chain Data and Network Activity Surge

On-chain data from Solana indicates increased daily transaction volumes. The network processed 32.7 million transactions on June 1, rising to 43.8 million by June 30, a nearly 34% increase.

Despite this increase in transactions, new addresses joining the network showed signs of slowing. June saw 25.4 million new addresses, slightly down from 26.65 million in May. Daily active users spiked on June 4 and June 26, reaching 2 million each day, but fell to 1.6 million by month-end.

The total value locked (TVL) within Solana’s ecosystem also declined, dropping from $4.8 billion on May 1 to $3.4 billion by June 30, a decrease of roughly 29%. However, despite this monthly decline, Solana’s TVL has grown 140% year-over-year, from $1.4 billion on January 1, 2024.

Solana has captured nearly 25% of the DEX market, with a total DEX trading volume of $38.4 billion in June. This positions Solana as a significant player in the decentralized finance space, second only to Ethereum in DEX trading volume.

Technical Indicators Signal Bearish Outlook for Solana

The Simple Moving Average (SMA) in the 1-day timeframe has displayed a negative crossover, indicating increased bearish action. The Moving Average Convergence Divergence (MACD) shows a consistent decline in the green histogram, signaling higher selling pressure. The MACD averages are converging towards a bearish crossover, suggesting further downside.

Despite the recent decline, Solana remains above the 200-day SMA, a crucial support level. Currently, the key support level to watch is $128. If the price stays above this level, the bullish trend might continue. However, breaking below $128 could lead to further declines toward the major support level at $87.

Solana’s price action has maintained a symmetrical triangle formation, indicating potential future movements. A bounce off the 200-day SMA support might lead to a 22% surge, potentially reaching $164, aligning with the triangle’s top trend line.

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