Solana (SOL) Price Analysis: This $498M Signal Could Prevent $200 Breakout in August

Solana Price Analysis:

Solana price stumbled towards $166 on July 31, marking a 14% decline in the last 72-hours, on-chain analysis shows traders un-staking their coins, a move that could further weaken SOL’s short-term recovery prospects.

Solana Enters 14% Decline amid Crypto Market Shake Up

Solana (SOL) has encountered significant headwinds this week as the broader cryptocurrency market faces increased volatility.

In the last week of July, the crypto market dynamics have shifted notably with high-profile events such as Trump’s speech at the Bitcoin Nashville Conference and the introduction of Ethereum ETFs, which injected fresh liquidity.

The Federal Reserve’s rate pause on Wednesday, July 31, further intensified market reactions, contributing to the growing market volatility.

However, investor sentiment has shown a marked preference for certain cryptocurrencies, leaving Solana among those struggling to gain traction. This uneven distribution of investor interest underscores the challenges facing Solana in the current market environment.

As depicted in the chart above, Solana is trading at $170 as of July 31. A broader view reveals that Solana’s price downtrend has declined as lows $166 within the daily timeframe.

Notably, this marks a 14.31% decline from its 30-day peak of $193.90 recorded on July 21.

Investors Unstake SOL Worth $500M SOL in 3 Days

Interestingly, Solana’s 14% loss contrasts sharply with the broader bullish market trend where cryptocurrencies like XRP, BCH, and BTC have achieved double-digit gains. This anomaly indicates the presence of internal bearish catalysts within the Solana ecosystem, overshadowing the positive market sentiment.

Deeper analysis reveals a worrying bearish trend among Solana’s core investors and node validators. The chart below shows the real-time changes in the number of SOL coins currently deposited in staking contract.

The chart above shows that investors have reacted to the market volatility by un-staking a large number SOL coins deposited in Solana protocol contracts.

According to data from StakingRewards.com, node validators held a total of 382 million SOL in staking contracts as of July 27. However, this figure has plummeted over the last 3 days, coinciding with the 14% price dip.

As of August 1, the total amount of SOL staked has dropped to 379 million SOL million, indicating that over the last 3-days, investors have un-staked over 3 million SOL, valued at approximately $500 million.

This persistent unstaking trend triggers bearish reactions for two primary reasons: firstly, the increased circulation of previously staked coins dilutes the short-term SOL market supply.

Secondly, it signals a negative outlook among long-term investors and stakeholders regarding SOL’s short-term prospects, potentially deterring new investors from entering the SOL/USD market at current levels.

Solana Price Forecast: Bears Longing for $150 Retest

Solana (SOL) has experienced a notable pullback, dropping 14.31% over the last three days to settle at $168.92. This decline is evident in the bearish engulfing pattern formed on the daily chart, highlighted within the yellow box.

The price fell below the middle Bollinger Band, which currently sits at $170.39, indicating potential for further downside movement. However, SOL remains above the lower Bollinger Band at $145.82, suggesting that there is still support to prevent a sharp decline.

The Balance of Power (BoP) indicator is at -0.40, reflecting bearish sentiment dominating the market. Despite this, the strong support around $150, coinciding with the lower Bollinger Band, could provide a cushion for SOL. If the price holds above this level, it could attract buyers, possibly leading to a bullish reversal. Conversely, a break below $150 might signal further losses, with the next support around $130.

On the upside, immediate resistance is seen at the middle Bollinger Band of $170.39, a level SOL needs to reclaim for any bullish momentum to build. Beyond this, the upper Bollinger Band at $194.96 serves as a significant resistance level. A break above this level could propel SOL towards $200, but such a move would require strong bullish support and increased trading volume.

In summary, while the current technical indicators suggest bearish pressure, the strong support around $150 could provide a foundation for a potential bullish reversal. Traders should watch the key levels of $170.39 and $194.96 on the upside and $150 on the downside to gauge the next direction for Solana.