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As Solana (SOL) grapples with bearish market conditions, a recent “death cross” on its charts has raised alarms about potential price declines.
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The altcoin’s current price consolidation near long-term support levels illustrates the fragility of its market position, heightened by a 93% revenue drop since January 2024.
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According to Cointelegraph, Solana’s revenue plummeted from $238 million to just $32 million amidst a lack of network activity following the memecoin craze.
Solana’s latest “death cross” raises concerns of price drops, highlighting a fragile market state and a significant revenue decline since earlier this year.
Understanding Solana’s “Death Cross” and Market Implications
On March 12, Solana completed a death cross on its one-day chart, considered a significant bearish indicator in technical analysis. This crossover occurs when the 50-day simple moving average (SMA) drops below the 200-day SMA, signaling a potential shift towards downward momentum. This event has historically triggered substantial sell-offs, particularly for SOL, which has seen three previous occurrences since its inception.
Analyzing the Support Levels: $125 to $110
Currently, Solana’s price action is hovering near critical support levels between $125 and $110. Maintaining above this range is vital for the bulls, as such support has traditionally led to rebounds in SOL’s price. Since March 2024, Solana has bounced back from this range six times, marking it as a pivotal point for potential bullish reversals. A significant drop below $110 could catalyze a downward price trajectory, potentially targeting around $80—a substantial correction of 30%.
The Technical Landscape: Bullish Divergences and Market Sentiment
Despite the bearish signals, there are indications of bullish divergence on both the one-day and four-hour charts, where the price and relative strength index (RSI) do not align. If SOL can avoid making another lower low, these divergences may provide support, allowing a possible recovery above $125. This scenario is critical to stave off further losses and could inspire a market shift, pushing SOL back towards stability.
Market Comparison: Lessons from Previous Death Crosses
Historical trends show that Solana’s performance following death crosses can vary significantly. For instance, the first death cross in 2022 led to a drastic 90% price drop, primarily driven by the FTX collapse, while other instances, such as the second death cross in September 2024, were followed by recoveries within a month. The current market conditions reminiscent of the 2022 situation suggest that traders and investors should proceed cautiously as they consider the potential for further declines.
Conclusion
The future of Solana rests heavily on its ability to maintain critical support levels while navigating through prevailing market challenges. If bulls can defend the $125 to $110 range, there is potential for a positive reversal; however, failure to hold this support could unleash significant downward pressure on SOL’s price trajectory. This precarious situation emphasizes the importance of ongoing monitoring and strategic positioning in the ever-evolving cryptocurrency landscape.
