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Solana: Will THIS derail SOL’s bullish outlook?
As of late, Solana (SOL) has witnessed a surge in transaction activity, but the market activity suggests that sellers have taken charge. With the asset currently trading within a bullish triangle structure on its chart, it appears that SOL is poised to potentially retest its all-time high.
Despite achieving a new all-time high in December and subsequently retracing 18.18% over the past month, Solana has gained 7.09% in the past week and 5.42% in the last 24 hours. While this recent surge could be seen as evidence of a bullish outlook, there is a crucial factor that must be considered – the asset’s transaction count.
A spike in transactions can be indicative of either bearish or bullish sentiment, dependent on whether market participants are buying or selling. In order to discern the trend, AMBCrypto analyzed Solana’s Exchange Netflow data. This metric measures the difference between the inflows and outflows of an asset on exchanges. A positive netflow indicates that more SOL is being sold, while a negative netflow suggests buying pressure has exceeded selling pressure.
As of now, Solana’s daily and weekly Exchange Netflow is negative, implying that there has been an increase in buying activity compared to the number of assets being dumped. This could be taken as evidence that buying power has outweighed selling pressure, which is certainly a positive for SOL.
However, the asset’s recent price surge of 5.42% over the past day appeared somewhat fragile due to a corresponding decline in trading volume. Typically, when an asset rises and simultaneously experiences decreased trading volume, this could be interpreted as a temporary rally that lacks robust market support. Unless Solana witnesses a concurrent increase in trading volume to back its upward momentum, it runs the risk of experiencing a deeper pullback.
Solana is currently trading within a crucial support zone on its chart between $188.89 and $173.24, which has historically been an area characterized by significant buying pressure. If SOL manages to hold onto this level, there could be a chance that the asset re-enters the consolidation phase it recently exited. Conversely, if this support level serves as a catalyst for further upward momentum, Solana may potentially reach its previous all-time high and even surpass it.
Disclaimer: The article is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.
Source: ambcrypto.com
