Key Insights:
- Solana’s market value has dropped by 49% since September 18, now trading at $125.94, showing an 11% weekly decline.
- Despite the drop, Solana’s network activity, including wallet creation, has increased, signaling a potential reversal in market sentiment.
- Solana-related ETFs, such as the Bitwise Solana Staking ETF, have seen strong inflows, reaching over $500 million in AUM within 18 days.
Solana has witnessed a significant market downturn since reaching a peak of $253 on September 18. Its market value has dropped by 49%, with the token currently trading at $125.94, showing an 11% weekly decline. This recent slump follows a broader sell-off in the cryptocurrency market, triggered by liquidity shortages and liquidation events in October.
Amid the ongoing declines, Solana lost support levels at key daily moving averages, namely the 50-day and 200-day moving averages, which stood at $179.99 and $179.93, respectively. This loss led to the formation of a “death cross,” a technical pattern indicating further bearish sentiment. A death cross occurs when a short-term moving average crosses below a long-term moving average, which typically signals further price drops.
Bullish Divergence: A Glimmer of Hope
Despite the overall negative market trend, a positive signal has emerged for Solana. On-chain data from Santiment reveals a unique bullish divergence. The number of interacting addresses and new Solana wallet creations has been increasing, with activity levels reaching a 10-week high. This rise in network engagement stands in contrast to the ongoing price decline, hinting at a potential reversal in price momentum. According to Santiment, this growing activity could lead to a significant turnaround in the near future.
In addition to the on-chain activity, Solana’s growing appeal is evident in the increasing interest in Solana-related exchange-traded funds (ETFs). The Bitwise Solana Staking ETF (BSOL) has seen substantial inflows, surpassing $500 million in assets under management (AUM) within just 18 days of trading. This rapid growth positions the BSOL as the largest Solana-based exchange-traded product (ETP) in the U.S. This influx of investor interest may provide additional support for the token in the face of broader market challenges.
While Solana continues to face significant challenges, especially with the recent market drop, the bullish divergence and growing network activity suggest a potential reversal in the future. Investors and analysts will likely keep a close eye on these developments, as they could signal a recovery for the cryptocurrency in the coming weeks.
