Solana (SOL) has experienced a significant decline in price amidst the current volatility in the cryptocurrency market. The price of SOL has dropped by over 13% this week, falling below critical support levels and closing at around $194. This decline has resulted in liquidations totaling $38 million, with $33 million attributed to long positions. Additionally, Solana's Total Value Locked (TVL) has decreased by more than 7% in just one day.
Traders are concerned about the recent price action, as SOL has struggled to maintain its position above the 200-day Exponential Moving Average (EMA) at $196. The price faced resistance around $230 earlier in the week, leading to a swift decline that breached both the daily support level of $201.85 and the 100-day EMA. Currently, the price remains under pressure, trading below the 100-day EMA, indicating a continuation of the bearish trend unless there is a recovery above the resistance level.
The decline in SOL's price has resulted in significant liquidations, primarily from long positions, totaling over $38.86 million. These liquidations can create Fear, Uncertainty, and Doubt (FUD) among investors, further intensifying selling pressure and contributing to a deeper price decline. The Relative Strength Index (RSI) on the daily chart is currently at 35, indicating strong bearish momentum and reinforcing the negative market sentiment.
Another factor contributing to Solana's bearish outlook is the sharp decline in its Total Value Locked (TVL). SOL's TVL has dropped from $11.22 billion to $10.35 billion, a decline of over 7% in a single day. This decline in TVL is concerning as similar declines in the past have preceded notable price drops of more than 10%.
If Solana can reclaim key resistance levels, there is a possibility of a rally towards the next resistance at $230. However, the path to recovery is challenging given the prevailing market conditions and the technical indicators suggesting a continuation of the downward trend. Investors and traders are advised to conduct thorough research and remain cautious due to the substantial risks associated with investing in cryptocurrencies. The focus will be on how Solana navigates these turbulent waters and whether it can regain investor confidence.