Solana looks very bearish at the moment after losing by 3.5% within the last 24 hours. Its performance shows that it might be in a strong dip. For example, its price has fallen by 15.9% within the last two weeks and by 18.8% within the previous month. At the time of writing, SOL is trading at $13087 SOL/USDT at Gate.io. Its weekly price chart is showing a very strong downtrend.
As observed, SOL has been in a downtrend for a long period. In fact, it has been in a strong bearish trend since April when it started moving sideways. The continued growth of the Solana-based PayPal stablecoin (PYUSD) whose market capitalization has crossed $1 billion has failed to prop up SOL.
Possible Reasons for Solana Downtrend
The main reason for Solana’s current bearish outlook is negative spot flows that occurred during the previous month. For example, it recorded $526 million in spot net outflow which was the third largest among the leading 10 cryptocurrencies. It is important to note, though, that spot net flow is negative for almost all the major cryptocurrencies.
Crypto Spot Netflow chart – Coinglass
We can best understand the dire situation Solana is in if we compare its net flow to that of bitcoin. Bitcoin’s negative net spot outflow is about three times larger than that of Solana. However, Bitcoin’s market capitalization is about 17 times bigger than that of Solana.
It is also important to realize that like all other cryptocurrencies Solana is susceptible to various economic influences. Currently, most crypto assets are within a bearish market. As a result, the crypto investor sentiment is generally negative. At the moment Solana is trading between $162 and $127 which has been its usual accumulation zone. Over the past 5 months SOL has been constantly testing these two levels. Even after the flash crash that occurred in August it tested the $162 level two times.
Will Solana Price Surge Again?
There is a high possibility that the SOL price will rise again in the near future. If the Federal Reserve cuts interest rates that could trigger the SOL price to rise again. However, going forward there are various factors which can contribute to its bullish outlook. The rise in investor interest in Solana products such as the NFT market and DeFi applications can increase the demand for SOL.
Based on past market trends, Solana has been very sensitive to changes in the broader crypto market. For example, if the leading crypto assets like Bitcoin and ETH trend its price may also rise.
The other factors that may boost Solana price performance are new partnerships and collaborations. Recently, it forged alliances with PayPal’s PYUSD stablecoin as well as LayerZero‘s cross-chain bridge which is expected to improve its functionality. In the long term that can attract more developers to the platform.
Looking ahead, the Solana Firedancer upgrade may improve the network’s performance in several ways. As a fact, Firedancer is an independent validator client that uses the C programming language. It will result in a rewriting of Solana’s three key functional components, Runtime, Networking and Consensus. The upgrade will help to handle the high demand of the Solana network. For example, it will scale up its gigabit-per-second speeds.
Solana Price Prediction
The renewed interest in staking and restaking activities on the Solana ecosystem are likely to increase the demand for SOL. Several exchanges are in the process of launching new restaking tokens to handle the growing demand for such assets. For example, recently Bybit announced the launch of a new liquid staking token, bbSOL. Liquid staking allows investors to get token rewards while they contribute to the platform’s liquidity.
At the moment, SOL is very bearish and there are no indications of a near future turn around. For example, on the 4 hour chart the 50-day moving average is falling, indicating the possibility of continued bearishness. However, since the last week of August the 200-day moving average has been rising, indicating that its price may increase in the longer term. Solana price is predicted to be fluctuating between $136 and $158 in September. However, the online crypto analytical platform forecasts the SOL price to reach $167.90 by the end of the year.
Overview of the Entire Crypto Market
The current poor performance of SOL is not an isolated event. Generally, most cryptocurrencies are in the red. To illustrate this, the entire crypto market trading volume has decreased by 39.56% in the last 24 hours. At present, the total crypto market volume is $36.2 billion. On the other hand, the total cryptocurrency market capitalization has dropped by 2.60% to $2.14 trillion. In terms of individual asset performance the bitcoin price dropped by 2.02% within the last 24 hours. During the same period ETH lost by 2.34% to trade at $2,447 ETH/USDT. Therefore, what the investors are waiting for is a strong catalyst for a market wide price surge.
