TLDR
- Solana (SOL) has fallen below its Realized Price for the first time in nearly 3 years
- SOL price dropped approximately 8% to $124, putting average holders underwater
- Whale activity shows significant withdrawals from major exchanges, including 195,000 SOL ($23.2 million)
- Validators are debating a proposal to reduce Solana’s annual inflation rate by up to 80%
- Current support levels are at $120 and $115, with key resistance at $134
Solana, the blockchain known for its fast transaction speeds and low fees, has experienced a sharp price drop that has pushed it below its Realized Price for the first time in nearly three years. This rare occurrence has caught the attention of market analysts and investors alike.
The Realized Price represents the average cost basis of investors on the network. When a cryptocurrency trades below this metric, it indicates that the average holder is now underwater on their investment.
Data from Glassnode shows that SOL is currently trading about 8% below its Realized Price. This means the typical Solana investor is facing unrealized losses of around 8%.
The last time Solana broke below its Realized Price was in 2022. That crossover marked the beginning of a bear market for the token.
Historically, the Realized Price has served as a boundary between bull and bear trends for many digital assets. The recent dip below this level could signal a momentum shift for Solana.
At the time of writing, Solana is trading around $124. This represents a decline of almost 9% over the past week.
Price trading in a bearish descending channel
The current market structure for Solana shows a bearish descending channel. Key support levels are established at $120 and $115, according to recent updates.
If SOL fails to hold above the $120 mark, it could face additional selling pressure. This might push the price down to the next support level at $115.
On the other hand, recovery above $128 with strong volume could trigger a bounce toward the $134 resistance level. SOL has not traded above $128 since mid-October.
Recent whale activity has added to market uncertainty. In the past nine hours, one whale withdrew 195,000 SOL (approximately $23.2 million) from major exchanges including Bybit, OKX, and Gate.io.
Another whale sold 108,688 SOL for $12.2 million USDC at a price of $112.3, nearly the day’s lowest point. This transaction represented a loss of about $7.48 million for the whale, as those tokens were withdrawn from Coinbase 11 months ago when Solana was trading around $181.
Such large movements by major holders can have substantial effects on market sentiment. When these moves result in losses, they may further dampen overall market confidence.
Meanwhile, Solana validators are engaged in discussions about a proposal that could reduce the network’s annual inflation rate by as much as 80%. This proposal aims to limit the number of new tokens entering circulation.
If passed, this measure could potentially support SOL’s price by reducing supply growth. However, the proposal is still under debate and will likely go through multiple rounds of discussion before any decision is made.
Bitcoin has also shown signs of weakness. According to Glassnode, Bitcoin’s short-term holders (those who purchased within the past 155 days) have fallen into negative territory.
This suggests that Bitcoin may continue to experience downward pressure in the near term. As the largest cryptocurrency by market cap, Bitcoin’s performance often influences the broader market, including Solana.
Uncertain outlook for SOL in the short-term
The combination of Solana trading below its Realized Price, substantial whale withdrawals, and the broader market downturn creates an uncertain outlook for SOL. Traders and investors are closely monitoring these factors to assess potential price movements.
Should a large number of holders decide to sell their positions to cut losses, Solana could face additional downward pressure. However, if selling remains limited, the price may find support and potentially recover.
The next few weeks will be critical in determining whether Solana can bounce back from this technical breakdown or if it will continue its downward trend. Market participants should watch key support and resistance levels for signs of directional movement.
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