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Solana (SOL) Price Maintains Bullish Outlook Despite $2.5 Billion Set-back

Key Insights:

  • Solana (SOL) price stumbled below the $100 milestone at the weekend, down 8% from its 30-day peak of $107 recorded on Jan 31.
  • SOL trading volume has declined by $2.5 billion during the price downtrend between Jan 31 and Feb 4 signaling strong fundamentals and minimal selling pressure. 
  • The Parabolic SAR technical indicator suggests that the bulls are still largely in control of the SOL market. 

Solana (SOL) price soared to a 30-day peak of 7 on Jan 31 as rising DeFi activity on the layer-1 network and a much-anticipated Jupiter (JUP) token airdrop attracted investor attention. 

Interestingly, SOL price has held up steady despite a whopping $2.5 billion decline in Solana spot trading volume in the last 5 days. Are the bulls revving up for a $120 retest? 

Solana Bulls Refrain from Selling Despite Price Pullback

Solana price broke market trends on Jan 31, soaring to a 30-day peak of $107, while the rest of the markets grappled with negative sentiments from Fed Chief Jerome Powell statements hinting at pushing back rate cuts. 

Increased demand on the Solana DeFi ecosystem and positive speculations surrounding the upcoming Jupiter (JUP) decentralized exchange airdrop sent SOL prices into a rally. 

However, since hitting the local top on Jan 31, SOL price has suffered a 8% pullback, exchanging hands at around $97 at press time on Feb 4. 

But interestingly, on-chain data trends suggest that the majority of current SOL holders maintain a bullish outlook amid the ongoing Solana price correction. 

Indicatively, the Santiment chart below shows the Solana trading volume at $3.8 billion on Jan 31 at the peak of last week’s rally. But as prices began to drop, SOL holders have increasingly refrained from trading. 

The latest reading shows that t SOL trading volume is down by $2.5 billion compared to last week’s peak, with only $1.3 billion worth of trades registered on Feb 3. 

Solana (SOL) Daily Trading Volume vs. Price | Source: Santiment

SOL trading volume has now dropped by 56% between Jan 31 and Feb 4. But notably, Solana price has only declined by 8% during that period. 

When trading volume declines significantly faster than price downtrend as observed above, it could be interpreted as a sign of dominant positive conviction that the consolidation will be followed by another rebound phase. 

Essentially, this decline in Solana trading volume suggests that existing holders are not rushing to sell their positions, hence the resilient price performance. 

Also, critical fundamental factors, such as rising demand from increased DeFi activity, and the positive developments surrounding the Jupiter project, have provided support for SOL price amid reduced trading volume.

Solana Price Forecast: $120 Retest in Focus

These key bullish factors and the curtailed selling pressure both put Solana in a prime position for an imminent rebound phase toward $120 in the days ahead. 

Furthermore, Current trends observed on the Parabolic SAR indicator also supports this optimistic Solana price forecast. 

When the Parabolic SAR points  below an asset’s current price, it signals an imminent reversal of the ongoing downtrend.

In this case, with the Parabolic SAR (blue dots) pointing to $87, while the current Solana price is $0.96, it confirms the positive outlook. 

Traders often interpret this situation as a signal to hold or buy, as it implies that the price trend might reverse and start moving upwards. 

If this scenario plays out as predicted, the bears can mount significant support at the $100 psychological support to avoid widespread margin call triggers.  

Solana (SOL) Price Forecast, Feb 2024 | Source: TradingView

On the flip side, the bears can summarily negate this bullish Solana price forecast if they force a reversal below the $85 area. However, as outlined by the SAR dots above, the buy-wall at $87 could form a major  resistance.

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Written by : Editorial team of BIPNs

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