Solana (SOL) experienced a price correction in early May 2024, falling 9% over two days after failing to surpass the $160 resistance level. However, on-chain data suggests that some investors remain optimistic about the long-term prospects of SOL.
Early May Rally Followed by Price Correction
Fueled by a surge of investor interest, Solana’s price climbed significantly in early May. Over $260 million in new capital entered the market, pushing the price up by 34% within the first week. This bullish momentum, however, stalled near the $160 resistance zone, leading to a correction that brought the price down to $145 by May 8th.
Staking Activity Suggests Investor Confidence
While the price decline resulted in a decrease in Solana’s market capitalization by over $4 billion, a closer look at staking activity reveals a potentially bullish trend. Staking allows investors to earn rewards for holding their SOL tokens, essentially locking them into a smart contract for a set period.
Data indicates that the total amount of SOL staked has increased during the recent price pullback. At the end of April, there were approximately 362.6 million SOL locked in staking contracts. By May 8th, that figure had grown to 365.9 million, representing an additional $490 million worth of SOL staked at current prices.
This increase in staking activity during a price correction suggests that investors are choosing to hold onto their SOL rather than sell. Staking allows them to generate passive income while waiting for the price to recover.
Solana Price Prediction: Rebound to $200 Possible?
Solana’s current price sits at $142 (as of May 8th). The significant amount of SOL removed from circulation through staking in May could help alleviate sell pressure and potentially keep the price above $140 in the near future.
Technical analysis using the Bollinger Band indicator also suggests a potential upside bias. Despite the recent correction, Solana’s price remains above its 20-day simple moving average (SMA) of $144. If the price can hold above this key support level, bulls may attempt another push towards the $200 mark throughout May.
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However, it’s important to acknowledge potential downside risks. A prolonged bearish trend could see SOL retest support around $130, as indicated by the lower Bollinger Band.
Solana’s recent price correction highlights the inherent volatility of the cryptocurrency market. While short-term price movements can be unpredictable, on-chain data suggests that some investors remain confident in SOL’s long-term potential.
The coming weeks will be crucial in determining whether the bulls can regain control and push the price back towards $200 or if a more sustained correction unfolds.
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