Solana (SOL) has been experiencing a sharp sell-off, with its price dropping nearly 9% in a day, threatening to dip below the crucial $130 support level for the first time since September 2024. As traders monitor market movements, the big question remains: Can SOL defend this key level, or is further downside inevitable?

Death Cross Warning

Two key technical indicators—the 50-day and 200-day exponential moving averages—are on the verge of forming a "death cross," a historically bearish signal for cryptocurrencies. If this crossover occurs, SOL could be at risk of further declines, potentially breaking below $100.

However, SOL's price is currently situated between the 0.5 and 0.618 Fibonacci retracement levels, known as the "golden zone." Historically, this area has acted as a strong support level, suggesting that a short-term rebound to the $150 range remains possible. If the $130 support level holds, traders could see a mean reversion play out, leading to a potential recovery.

The Relative Strength Index (RSI) has fallen below 30, marking an oversold condition that previously signaled trend reversals. In June 2023, a similar RSI dip led to a price rebound, hinting that SOL could be nearing a local bottom. However, current market sentiment remains deeply negative. Crypto analyst Miles Deutscher recently described Solana’s current state as a "capitulation moment," reflecting widespread fear and uncertainty among traders.

Data from Santiment also indicates that most investors are bearish on Solana, alongside major cryptos like Bitcoin, Ethereum, and XRP. This pessimism, combined with broader market sell-offs, has intensified the pressure on SOL’s price.

Adding to the uncertainty, the market is bracing for upcoming Solana token unlocks, which could further increase selling pressure. However, given that these unlocks have been widely anticipated, some analysts argue that the event may already be priced in. If the market absorbs the additional supply without a sharp decline, it could signal growing strength and resilience for SOL in the medium term.

Potential Scenarios for Solana

  1. Bullish Case: If $130 holds as support and SOL rebounds from the golden zone, the price could climb back toward $150, with potential to regain $200 if broader market conditions improve.
  2. Bearish Case: A daily close below $130 would open the door for a retest of the $120–$110 liquidity pocket, with the risk of further declines if market sentiment worsens.
  3. Neutral Case: Solana consolidates between $130 and $150, forming a temporary bottom before the next major price movement.

While the short-term outlook for Solana remains uncertain, technical indicators suggest that the $130 support level will be a battleground for traders. If historical trends hold, a price bounce is possible, but the looming threat of a "death cross" and ongoing market-wide sell-offs mean caution is warranted. For traders and investors, the coming days will be critical in determining whether SOL finds support or extends its decline toward lower levels.

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