The price of Solana (SOL) has been steadily rising for almost four months, making the altcoin one of the most successful assets in the current market cycle.
The recent rise almost allowed SOL to reach $250, but changing sentiments and decreasing investor activity halted its movement. The lack of support from holders now threatens to derail the rally.
Solana holders are retreating
Investor activity in the Solana network has noticeably decreased in recent weeks. The number of active addresses has fallen to a 13-month low, indicating a decline in engagement with on-chain operations. This drop points to a weakening of confidence among retail traders, many of whom prefer to hold assets rather than transact in times of uncertainty.
A shrinking user base often leads to decreased network utility, which can negatively impact price stability. Solana risks losing the support needed to continue the rally without consistent transaction volume or demand from users.
Number of active Solana addresses. Source: Glassnode
The technical structure of Solana remains bullish overall, despite short-term concerns. The Chaikin Money Flow (CMF) indicator has fallen below zero, meaning investors are pulling funds out of Solana. This indicates a temporary decline in liquidity in SOL.
However, the CMF still shows an upward trend, indicating hidden strength in Solana's long-term trend. If the trend continues, it may stabilize the price and prevent significant losses.
CMF indicator for Solana. Source: TradingView
The price of SOL may fall
At the time of publication, Solana is trading at $222, just above support at $221. SOL has demonstrated steady growth over the past three and a half months, making this level important for maintaining market structure.
Given the current conditions, a decline to $213 is possible if selling pressure intensifies. More significant outflows will accelerate the decline, pushing SOL to test the $200 level and breaking its multi-month upward trend.
Solana price analysis. Source: TradingView
If Solana bounces off the $221 level and market sentiment improves, it will have a chance to rise to $232 and above. This will cancel the bearish scenario and possibly resume the rally.
