The Correction Warning: A Tale of Two Indicators

According to recent analysis, there's a growing concern that Solana's (SOL) impressive price surge might be outrunning its underlying fundamentals. Analysts have identified a classic "bearish divergence" pattern: while the price of SOL has soared, key on-chain metrics like daily active addresses have been declining. The number of daily active addresses on the Solana network has reportedly plummeted by more than 80% since May, raising questions about whether the price increase is sustainable. Historically, this type of divergence often signals a potential trend reversal and could lead to a correction.

The Bullish Counter-Argument: A Strong Support Level

On the other hand, a separate analysis highlights that Solana's price is holding a crucial support level. The price has been consolidating above $200, and there's a strong bullish trend line forming. This suggests that the current market momentum is still intact and that a breakout above immediate resistance levels could push the price higher. If the price can successfully clear the $218 resistance zone, it could aim for further gains toward the $220 and even $232 levels.

📌 Conclusion

The current market for Solana is a classic battle between bearish and bullish signals. While the recent price rally is impressive, the declining network activity presents a significant risk of a price correction. Conversely, the strong technical support and bullish trend line suggest that the rally could continue. The immediate future of SOL will likely be determined by whether it can maintain its price action while addressing the underlying concerns about its on-chain activity.

🔐 Disclaimer

This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry a high level of risk and volatility. Always conduct your own research (DYOR) and consult a professional financial advisor before making any investment decisions.