Solana (SOL) Price Analysis: Should You Be Worried About the Dip?

Bearish Outlook Continues as Solana (SOL) Price Drops by 7% in 24 Hours, Currently Sitting at $82

Solana’s price has fallen by 8.9% in the past 24 hours, leading to speculation of a bigger sell-off in the future.

By Joel Frank | Last updated: January 22, 2024 23:55 EST | 5 min read

The Solana (SOL) price took a 7% dip in the past 24 hours, causing concern among traders. Currently, the price hovers around $82, after it managed to defend the $78 support level earlier in the day. However, the bigger worry is the possibility of a larger sell-off, given that the Solana price is currently below its 21 and 50-day moving averages (DMAs), and the broader market is experiencing a downturn after the approval of spot Bitcoin ETFs (source: Blocking.net).

SOL’s Technical Outlook

The technical outlook for SOL has worsened as it broke below a pennant structure and the uptrend it had formed in recent months (source: Blocking.net).

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If the Solana price drops below the key long-term support-turned-resistance level at around $78, it could trigger increased sell pressure. In that case, Solana bears would likely target a break below the 100-day moving average near $70 and the late November lows at $51.

Solana (SOL) Price Chart / Source: TradingView

Here’s Why the Solana Price Dip Might Not Last

While the near-term outlook for the Solana price seems concerning, there are reasons to be optimistic that this dip won’t last. Several indicators related to the health of the Solana ecosystem suggest continued strength.

According to data from TheBlock, the 7-day moving average (DMA) of daily active addresses remains well above the levels seen in 2023, with around 650,000 active addresses. Additionally, the 7DMA of new addresses being created daily is close to 400,000, and the 7DMA of value being moved on-chain is around $30 billion, significantly higher than the 2023 average levels (source: TheBlock).

Despite the recent fall in trade value locked (TVL) as shown by DeFi Llama data, the market cap of Solana-issued stablecoins continues to rise. This indicates that capital is still flowing into the ecosystem, and the decline in overall TVL is mostly a result of the falling Solana price (source: Blocking.net).

Based on the healthy ecosystem of Solana, it is reasonable to expect that the Solana price should remain at levels significantly above the range seen in 2023 ($15-30). Therefore, any dips in the price should be seen as an opportunity to buy.

It’s worth noting that most analysts still believe that cryptocurrency is in a new bull market, which further supports the optimism surrounding Solana’s potential for recovery.

Q&A: Readers’ Concerns Addressed

Q: What could potentially trigger a larger sell-off in Solana? A: If the Solana price drops below the key long-term support-turned-resistance level at around $78, increased sell pressure may occur, potentially leading to a larger sell-off.

Q: Are there any positive indicators for Solana’s recovery despite the recent dip in price? A: Yes, there are several positive indicators. The 7-day moving average of daily active addresses remains high, suggesting continued strength in the Solana ecosystem. The market cap of Solana-issued stablecoins is also rising, indicating that capital is still flowing into the ecosystem.

Q: Why should investors consider buying the dip? A: Solana’s healthy ecosystem suggests that the Solana price deserves to remain at levels well above its previous range. Furthermore, most analysts believe that cryptocurrency is in a new bull market, which provides a favorable environment for price recovery.

ADA Alternative to Consider – Sponge V2 ($SPONGEV2)

Cardano (ADA) has been a popular investment choice, with the potential to deliver significant gains this bull market. However, for investors seeking even higher returns, Sponge V2 ($SPONGEV2) is worth considering.

Sponge V2 is the updated version of the Spongebob Squarepants-themed $SPONGE token, which achieved a market cap of nearly $100 million and delivered 100x gains to its earlier investors in 2023. Holders of $SPONGE tokens can stake their tokens to receive an equivalent amount of $SPONGEV2 tokens and earn staking rewards with a minimum APY of 40%.

Over $5 million worth of $SPONGE tokens have already been staked, earning an APY of over 300%. Furthermore, $SPONGEV2 will power a new play-to-earn game, details of which will be revealed soon. With its current success, the original Sponge token has seen significant price gains, approaching its all-time high above $0.0012. Since the start of November, it has experienced a near 10x increase in value. With a market cap of only $26.5 million, the meme coin has considerable potential for further upside (source: Awesome Linking).

Conclusion: An Opportunity Amidst the Dip

Although the recent dip in the Solana price may seem concerning, the underlying strength of the Solana ecosystem and positive indicators suggest that the dip may not last. Investors should consider buying the dip, as Solana’s healthy ecosystem and the overall positive sentiment within the cryptocurrency market provide a favorable environment for recovery.

Additionally, for those seeking higher returns, Sponge V2 ($SPONGEV2) presents an intriguing alternative within the meme coin space, with its staking opportunities and upcoming play-to-earn game.

Remember, investing in cryptocurrencies is inherently risky, and this article does not constitute investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.

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Reference List: 1. BTC Blasts Past $47K as Bitcoin ETF Excitement Gets Feverish 2. Buy, Sell, or Trade Tokens: Optimism on the Network 3. Approval of Spot Bitcoin ETFs: What You Need to Know 4. Solana Price Prediction: SOL Bounces Back to $100, Can SOL Reach $1,000 in 2024? 5. Unraveling the Strange Solana Memecoin: Blasting to $20,000 6. Near Protocol: Going from Zero to NEAR Price Drops 13% 7. Institutions Look to DeFi for Regulated Solutions in 2024 8. Shiba Inu and Dogecoin Face Tough Conditions as Nuggetrush Reaches $15 Million Raised

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