Solana falls below $20, are further losses imminent?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Solana fell below an HTF demand zone at $20.
- The price action signaled strong bearish intent, and a move to $17 seemed likely.
Solana [SOL] had formed a short-term range between $20 and $22.2 in the latter half of August. However, recent selling pressure saw the bulls cede control of this support zone to the bears. This did not bode well for long-term investors, as another 12% drop was inbound.
Realistic or not, here’s SOL’s market cap in BTC’s terms
Questions about Solana’s network stability were raised when it was revealed that MakerDAO [MKR] was considering the former as its preferred blockchain. On this note, co-founder Rune Christensen tweeted that the technical quality of the Solana codebase was what NewChain required.
The failure to defend the weekly order block signaled SOL is headed lower- but will we get a retest first?The $20-$22 zone, demarcated by the red box, represented a former bullish order block from the weekly timeframe for SOL. On 31 August, a 12-hour trading session closed below the order block, which meant bears had won this battle. This meant the range formation was also defeated.
The RSI and OBV pointed toward selling pressure and downward momentum. It was possible that SOL would see a move higher to retest the order block as a bearish breaker block, but such a bounce was not a necessity.
If Bitcoin [BTC] slumped toward $24.8k or lower, it could drag SOL southward quickly. It can be hard for traders to position themselves for such a scenario.
On the other hand, a retest of the $20-$22 area could offer a more ideal entry for short sellers, targeting the 23.6% Fibonacci extension level at $16.94.
The market sentiment continued to favor the sellers as most speculators remained sidelined
How much are 1,10,100 SOLs worth today?
The Open Interest has been relatively flat over the past two weeks when SOL slumped to the $20 support level. Millions of dollars flowed into the futures market when SOL bounced toward the $21.5 level on 29 August.
But the sentiment has since shifted. The late hours of 4 September saw SOL dip from $19.5 to $19.2 and an increase in Open Interest, signaling short-selling activity. The spot CVD has been in a slow decline over the past week as well, although funding rates were positive.