This Is Why Solana’s (SOL) Brief Stint Above $200 May Be Nearing Its End
2024-11-13

Solana’s price has recently witnessed a significant uptick, surpassing the $200 mark and peaking at a three-year high of $225.21. This Solana price surge has been fueled by the broader cryptocurrency market’s positive momentum and the uptick in demand for the Layer 1(L1) blockchain network. 
However, with buying pressure waning and profit-taking on the rise, Solana has started to shed some of its recent gains. This suggests a possible pullback below the $200 mark in the meantime. How likely is this scenario?
Solana Traders Begin Taking Profits
SOL currently trades at $202.51, noting a 5% decline in price over the past 24 hours. Notably, its trading volume has surged by 3% during the same period, highlighting the uptick in selling pressure. 
When an asset’s price declines while trading volume climbs, it indicates an increase in selling activity as more market participants actively distribute their holdings. This combination of falling prices and rising volume suggests a strong bearish sentiment in the market. 
It confirms that during the period under review, many SOL traders have chosen to sell their coins rather than buy more. This has pushed the coin’s price downward as the supply being sold has overwhelmed the demand to purchase it.
Moreover, the coin’s negative Balance of Power (BoP) supports this bearish outlook. This indicator, which measures the strength of buyers versus sellers in the market, is at -0.43 at press time. A negative BoP suggests sellers are in control and attempting to push the asset’s price further downward.
SOL Price Prediction: The $193.92 Price Level Is Key
Additionally, the surge in Solana’s funding rate suggests a possibility of a continued pullback below the $200 price mark. As of this writing, it has spiked to an eight-month high of 0.037%. 
The funding rate is a mechanism used in perpetual futures contracts to keep the contract’s price aligned with the spot price of the underlying asset. When the funding rate spikes, it often indicates a strong market imbalance—typically with buyers in control. This is seen as a bearish signal, which signals an imminent price pullback.
This happens because as holding long positions becomes costly, some traders may opt to close out to avoid high funding fees, which can create downward pressure on the asset’s price. Additionally, if the asset’s price begins to decline, highly leveraged long positions are at risk of liquidation, potentially triggering a cascade effect that could drive the price down even more.
At press time, SOL is trading at $202.51, holding just above its support level of $193.92. Increasing selling pressure could drive the coin’s price to retest this critical support. If bulls are unable to defend this level, it confirms the downtrend, pushing SOL’s price further down toward $169.36. 
On the other hand, a strong defense of this support level could lead to a rebound, reinitiating the Solana price surge. If this happens, SOL’s uptrend has the potential momentum to retest its three-year high of $225.21.