Solana has seen a significant wave of profit-taking since reaching its all-time high of $295.83 on January 19. This has driven its price to multi-month lows, with the coin currently trading at levels last seen in October.
However, on-chain data and key technical indicators suggest a recovery could be on the way.
Solana Hits Capitulation Phase—What’s Next for SOL?
An assessment of the SOL/USD one-day chart shows that the coin’s Relative Strength Index (RSI) has dropped below the 30 level for the first time since June 2023. This means that SOL has become extremely oversold, indicating that selling pressure may be exhausted and a price correction could be underway.
When an asset’s RSI falls below 30, it is deemed oversold. This often signals a potential reversal or price rebound as traders seek buying opportunities at price lows. Historically, such oversold conditions have preceded sharp rebounds.
Hence, SOL might be primed for a rally if market participants interpret this as a buy signal and increase their coin accumulation.
Another indicator of a potential short-term rebound in SOL’s price is its poor market sentiment. In a post on X, popular crypto analyst Miles Deutscher states that the altcoin is experiencing extreme bearish sentiment, the worst it has been in over a year since it first regained the $100 price level.
According to Deutscher, “after being a top performer for so long,” SOL is “finally having its capitulation moment.” Capitulation refers to a phase where investors, exhausted by prolonged losses, begin to sell off their holdings in panic or frustration, often marking a market bottom.
This is because once the “paper hands” sell out, the selling pressure in the SOL market eases up, paving the way for a rebound if buyers interested in acquiring the coin at low prices step in.
SOL Hovers Near Key Support—Will Bulls Push It to $200?
SOL trades at $141.67 at press time, resting slightly above the support level of $136.62. If the altcoin witnesses a resurgence in buying pressure, this support level will strengthen, propelling SOL’s price toward $182.31, where a major resistance lies.
A successful breach of this level could send the coin’s price above $200 to exchange hands at $222.14.
On the other hand, if the downtrend continues, SOL’s price could fall to $120.72.
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