Solana Experiences Price Correction Amid Profit-Taking and Ethereum's Gain
Summary:
After a robust surge of over 100% in December, Solana (SOL) is experiencing a price correction influenced by profit-taking and a capital rotation towards Ethereum (ETH) tokens. This decline coincides with Ethereum's gain, suggesting a capital rotation from SOL to ETH. Further, a decrease in total-value-locked (TVL) in Solana's decentralized apps has been observed, which might increase the market sales pressure. The technical analysis suggests a possible correction or consolidation phase in January, with bears trying for a price below $100 and bulls aiming for a price above $130.
The Solana (SOL) cryptocurrency is currently seeing a decrease in price after experiencing more than 100% surge in December. The dip in SOL's value seems to be driven by investors taking profits and pivoting their funds to Ethereum (ETH) tokens.
The price correction of Solana
As of December 28, SOL's price slid down to $101.50, following a three-day high of $126.50 on December 25, its zenith since April 2022. The sudden decrease in price indicates that investors are capitalizing on their earnings after the recent surge in Solana's value. SOL’s daily relative strength index (RSI), which crossed the overbought mark of 70 this month, further supports this claim.
The wealthiest Solana investors began offloading their SOL assets recently. A substantial deposit of 303,756 SOL worth $32.8 million was made into Binance on December 28, amidst a 5% daily decrease in Solana value, potentially amplifying the selling pressure.
Battle of the Blockchain Rivals
This decline in Solana's value happens at a time when Ethereum, its main competitor in the layer-one (L1) blockchain sectors, is gaining traction. Noteworthily, Ethereum’s price rose about 12.35% to approximately $2,450 during Solana's price correction. This led to a sharp 23.75% drop in the SOL/ETH pair this week, suggesting a reshuffling of capital from SOL to ETH.
Impact on Solana's Total Value Locked (TVL)
Solana's price decrease also follows a drop in the total value locked (TVL) across its ecosystem of decentralized apps (dapps). Solana’s TVL has witnessed a reduction of approximately 2 million SOL (equates to $200 million) since December 20, as per DeFi Llama. A decrease in the number of SOL locked in Solana's apps implies increased supply elsewhere, including on crypto exchange platforms, which could consequently drive up market sales pressure.
Predictions for Solana's Future Price
Technical analysis of Solana's price suggests that the SOL/USD pair has become overbought even on larger timeframe charts. This scenario raises the chance of a price correction or consolidation phase in January.
The pessimists will try to push the price below its 0.382 Fibonacci line support of around $100, aiming for the next significant support level at the 0.236 Fibonacci line (approximately $68.5), a drop of 35% from current levels. On the contrary, optimists will seek a definitive weekly (and annual) closing above the 0.5 Fibonacci line, roughly $130. Turning this level into support could potentially drive SOL's price up to $150 by February.
This information is purely for general awareness and should not be taken as legal or investment advice. The views and opinions expressed are solely those of the author and do not necessarily echo the views and standpoints of Cointelegraph.
Published At
12/28/2023 6:04:23 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.