Key Takeaways
Why has Solana been unable to flip the $200 level to support?
The on-chain metrics showed that selling pressure was still in place in recent days, and demand was not strong enough to halt losses.
Can this change in favor of the bulls, or will the downtrend continue?
The cost-basis distribution heatmap and capitulation metrics showed that the $180-$190 region could be a launchpad for SOL to move above $220.
Over the past week, Solana [SOL] has shed 15.11%. The majority of these losses came on the 10th of October. On that day, SOL dropped from $220.93 to a low of $168.79, a 23.6% drawdown, before bouncing higher over the weekend.
At the time of writing, the altcoin was challenging the $200 psychological resistance level.
AMBCrypto observed that on-chain metrics showed that selling pressure and profit-taking had been strong in September, but have begun to ease over the past ten days.
The case for a Solana rally
Source: Glassnode
The cost basis distribution heatmap highlights key price levels around Solana’s current value. Notably, price reactions in early August and September show a pattern similar to what’s unfolding now.
In both months, Solana experienced a sharp drop below a major cost basis level – $164 in August and $202 in September, followed by a recovery and retest of those zones before continuing higher.
As SOL moved up, holders gradually distributed supply within those price ranges, reflected by fading color intensity on the heatmap.
With the price now approaching the $193 level, a key accumulation zone, another rebound may be on the horizon.
Source: Glassnode
Another piece of evidence that supported weakened selling pressure was the Hodler Net Position Change. This metric has been negative since mid-September, and it still remains negative.
However, the position change was trending toward zero from deeply negative values, showing that the profit-taking period was nearing its end.
Spikes in forced selling indicate a local SOL bottom
Source: Glassnode
The profit pressure metric formed a local peak in mid-September. As the metric trended higher last month, the Hodler Net Position Change had also grown increasingly negative.
However, over the past three weeks, the profit pressure has fallen.
Source: Glassnode
Combined with the capitulation metric, it appeared that Solana was in the process of forming a local market bottom after forming a local top at $250.
The capitulation metric’s spikes show increased selling at a loss, which tends to happen when the market is in distress. It generally marks local bottoms.
This was also reflected in the CBD chart. Since the 9th of October, the supply at the $230 price bucket (representing average cost basis for holders) has reduced. This showed fearful selling.
Overall, the chances of a Solana recovery from the $180-$190 region appeared good. However, such a recovery would need a Bitcoin [BTC] beyond the $117k resistance, for a start.
If BTC trends downward below $108k and the $102k levels, Solana investors must adopt a more bearish outlook.
Source: https://ambcrypto.com/solana-dips-below-200-mapping-sols-next-price-move/
