Solana’s price is having trouble getting back above the $170 support level after being turned away from its new yearly high at $174. Just a day after Bitcoin hit a record high of $73,737, Solana’s price began above $170.
Since the start of the fourth quarter of last year, the third-largest smart contracts token has been on a rally from $20, which has been great for investors who held onto it.
Solana Stays Strong Despite Uncertain Market Conditions
SOL, the native token fueling the Solana ecosystem, faced volatility in January, dropping from its December peak of $125 to $80. Despite this setback, Solana remains resilient amidst the uncertainty prevailing in the broader crypto market.
Fueling the optimism surrounding Solana is its robust ecosystem, which serves as a hub for developers in the decentralized finance (DeFi) sector, stakeholders in Web3, investors, and more. This vibrant ecosystem contributes to Solana’s appeal and resilience, even during challenging market conditions.
The memory of Solana’s impressive performance during the previous bull run, when it surged to a new all-time high of $260, continues to inspire investor confidence. The prospect of another bullish run has ignited FOMO (fear of missing out) among investors, driving them to bet on Solana’s potential for reaching new heights, regardless of the price reaching higher levels.
Solana Faces Overbought Conditions Amidst Potential Correction
The Relative Strength Index (RSI) indicates that Solana is highly overbought, both in the short and longer timeframes. In the four-hour chart, the RSI is neutral, falling from highs around 80. The breach of short-term support at $170 suggests an ongoing correction, with SOL currently hovering around $167. A bounce-back is anticipated from the previous day’s open at $163.88.
Profit-taking contributes to the sell-off from Solana’s recent high, potentially leading the token to drop to $140 before aiming for the psychological resistance at $200. The Money Flow Index (MFI), which gauges the flow of money in and out of Solana, indicates increasing sell-side pressure. If the downward trend from the overbought region (70 – 100) continues, SOL might seek support at $160, supported by the 20-day Exponential Moving Average (EMA) and the ascending trendline.
Despite the current bullish trend in the crypto market, there’s uncertainty regarding a possible major retracement ahead of the Bitcoin halving scheduled for April.
Crypto Markets and the “Buy the Rumor, Sell the News” Trend
A new trend has emerged in the crypto market where investors capitalize on hype surrounding a major event, only to swiftly cash out once the event unfolds. This behavior is commonly referred to as the “buy the rumor, sell the news” narrative.
Bitcoin halving occurs approximately every four years as a mechanism to control inflation by reducing the supply of BTC in circulation. This reduction is achieved by halving the rewards granted to miners.
Historically, Bitcoin’s price tends to rally following a halving event as the diminished supply meets heightened demand. This positive sentiment often extends to the broader market, sparking rallies among altcoins.
However, the “buy-the-rumor, sell-the-news” narrative can overshadow the performance of major altcoins like Ethereum and Solana. In the event of significant turbulence in the Bitcoin market post-halving, these altcoins may experience substantial declines in value.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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