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Cryptocurrency News Articles
Solana Concerns Grow as On-Chain Activity Slumps Amidst Price Rise
May 03, 2024 at 03:39 am
Amidst a decline in trading interest, the Solana network faces challenges in maintaining its on-chain activity. New and active address counts have dropped significantly, raising concerns about the network's growth and utility.
Solana's On-Chain Decline Casts Doubt on Sustainability of Price Recovery
Amid the recent market turbulence that sent shockwaves through the cryptocurrency sector, Solana (SOL) has emerged as a source of concern for investors. Despite a temporary rebound in price, the network's dwindling on-chain activity presents a significant challenge to its long-term viability.
Plummeting New and Active Addresses Raise Red Flags
In the past fortnight, the number of new addresses created on the Solana blockchain has plunged by an alarming 14.7%, tumbling from a weekly high of 915,000 to a mere 780,000. This stark decline signals a worrying trend of diminished interest in the network and its functionalities.
Historically, a surge in new addresses signifies increased adoption and utility, which in turn bolsters confidence in a blockchain's prospects. However, the current downtrend suggests potential issues that could undermine Solana's appeal, such as declining user engagement, technical hiccups, or increasing competition.
Compounding these concerns is the simultaneous drop in active addresses on the Solana network, which has fallen from a peak of 1.21 million to just above 1.1 million. This further indicates a slowdown in transaction activity and user engagement, casting doubt on the sustainability of the recent price rebound.
Failed Liquidations Stall Bullish Momentum
The market's reaction to Solana's price rise has also been telling. Despite a significant surge in SOL liquidations, with over $9.5 million in short positions liquidated, the price has failed to break through key resistance levels. This suggests a lack of sufficient buying pressure to sustain the rally, a worrying sign for bulls.
Analysts warn that this lack of conviction could lead to a reversal in the current trend as Solana approaches resistance channels without adequate support. As of writing, SOL trades at $138, having surged over 11% in the last 24 hours, but faces strong resistance at the 200-day EMA at $150.
Potential Bearish Reversal Looms
While bulls have temporarily halted a potential slide at $120, the inability to break through crucial resistance levels leaves Solana vulnerable to a bearish reversal. If sellers manage to breach the $116-$120 support zone, the selling pressure could intensify, potentially pushing SOL/USDT down to $100 or lower.
Bulls Need Swift Action to Retain Control
To regain momentum, bulls need to quickly drive the price above the 200-day EMA at $150. This decisive move could catch bears off guard, triggering a short squeeze that could potentially propel the pair towards the 50-day SMA at $166. However, time is of the essence as the clock ticks down on the current recovery window.
Conclusion
Solana's declining on-chain activity and failed price breakout raise serious concerns about the sustainability of its recent recovery. The drop in new and active addresses, coupled with the lack of buying pressure at resistance levels, suggests a weakening trend that could lead to a bearish reversal. While bulls still have a chance to salvage the situation, they must act quickly and decisively to overcome the resistance and re-establish confidence in Solana.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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