The crypto market has seen increasing selling pressure as Bitcoin reached its monthly lows. However, altcoins have been hit even harder. Solana price has fallen over 50% from its all-time high in this context. Traders are now wondering how low Solana (SOL) can go.
On February 27, Solana dropped to $130.69, its lowest level since September. A slowdown in the memecoin market, high-profile scandals, and overall market conditions created a perfect bearish storm.
Solana (SOL) has seen some of the biggest volatility in recent months, particularly with its Relative Strength Index (RSI) dipping below 30 points, a level last seen in June 2023, when US regulators named Solana in a lawsuit against Coinbase. Previous major dips in the RSI included during the FTX collapse, which saw SOL’s subsequent drop to $8.
Still, the low RSI could also indicate that Solana is oversold, which suggests a recovery may be imminent. In fact, the last two instances of SOL’s RSI reaching these levels were followed by major rallies. However, another major price decline, or capitulation, is likely before SOL recovers.
The outcome will likely depend on the SOL price retaining its support at $136.62 in the coming weeks. After a brief dip to $130, the token bounced back. Subsequently, it once again retested the $136.62 support level and recovered to its current level of $139.34.
Why Solana Might See More Pain Ahead
Despite the low RSI levels, Solana may still be trending downward. Firstly, DeFi activity on the Solana network is declining. Weekly DeFi volume dropped from $97 billion in the second week of January to just $11 billion last week.
This contributes to SOL’s overall poor market sentiment. Trader sentiment is at a year-long low, showing traders are frustrated over chronic bad performance. This increases the likelihood of SOL’s capitulation.
At the same time, overall market conditions compound these issues. Namely, the bear market usually favors Bitcoin relative to altcoins, leaving them little liquidity as traders run for relative safety. This suggests that Solana may not have reached its lowest point yet.
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