Solana has been on a downward trajectory since the beginning of the month, falling to trade below $200. As a result, the SOL price has edged slightly below the 100-day moving average, despite this week’s slight rebound.
The SOL price continues to descend from its most recent upward trajectory that saw the price hit a new multi-month high of about $255.
Traders will be targeting key Fibonacci retracement levels for short-term rebounds, with the first major target zone being the 50% Fib level at $174, and the second, 61.8% at about $155. Should the decline continue, the 76.4% Fib level at around $130 becomes a major buying zone for swing traders.
Trendwise, Solana trades within a short-term descending channel formation, which supports a short-term bearish bias. However, it recently bounced back at Fib level 38.2%, before advancing to trade slightly above the 23.6% level.
From a wider perspective, the 50% Fib level appears poised to trigger the next rebound as it intersects with the long-term upward-trending support, which was last triggered at the 23.6% Fib level, after the first retracement between May and June.
This suggests that, while the bears seem to be winning the short-term battle, there is enough upward momentum to support a bullish case for swing traders.
While Solana (SOL) remains one of the most fundamentally promising cryptocurrencies to invest in the long-term, ecosystem-wise, it is not entirely immune to the general macro conditions affecting the crypto market.
The U.S. is quickly emerging as a crypto hub amid promising progress in establishing a “pro-crypto” environment. As such, any economic uncertainty in the country is bound to have some effect on crypto.
Over the past three weeks, the Republicans and Democrats have been in a stalemate about budgetary decisions, a situation that has led to a “government shutdown”, in which government spending has been halted.
And about a week ago, President Trump triggered one of the biggest crypto sell-offs in recent months after announcing plans for more tariffs on Chinese goods. Even Bitcoin, the biggest cryptocurrency by market cap, saw its price fall to the lowest level of about $107,158 since July, while SOL fell to $182.
Having lowered the Fund’s Interest rate by 25 basis points in September, Trading Economics forecasts that the Federal Reserve will continue cutting the rate by 25 points in the next two updates, eventually hitting 3.75% in December.
Solana has grown from an Ethereum wannabe to one of the fastest-growing dApp ecosystems on the blockchain. The layer-1 blockchain has established itself as the go-to platform for consumer-facing apps because of its fast blockchain, scalability, and low transaction fees.
The blockchain powers some of the leading decentralised exchanges (DEXes), including Jupiter, Raydium, Orca, and Aldrin.
Overall, DEXes on Solana generated more than $4.1 billion in transaction volume over the last 24 hours and over $143 billion in the last 30 days. In comparison, Ethereum leads with $4.17 billion 24-hour transaction volume and just over $145 billion in the past 30 days, according to DeFiLlama data.
Solana’s DEX ecosystem also received another boost this week on the news that the layer-1 blockchain’s co-founder, Anatoly Yakovenko, is designing a perpetual DEX, according to GitHub documentation.
Perpetual DEX trading platforms, which feature the likes of Hyperliquid, Aster, and Lighter, are growing in popularity as the crypto market continues to embrace derivatives trading.
Moreover, Solana has become a target of publicly traded companies looking to establish strategic digital asset portfolios as a balance sheet hedging instrument. Some are following in the footsteps of Michael Saylor’s crypto hoarding strategy with MicroStrategy (NASDAQ:MSTR).
For Solana, SOL Strategies has been one of the leading SOL hoarders, which in May filed to raise $1 billion earmarked for investments in Solana.
Last month, Forward Industries filed an automatic shelf registration statement with the SEC for an at-the-market equity offering of up to $4 billion to buy SOL tokens. Last week, the company revealed via a press release that it now holds more than 6.87 million SOL, which, based on the current SOL price of about $196, equates to over $1.34 billion in SOL holdings.
Although technical analysis indicates SOL will likely continue to decline in the near term. The token will likely eventually triumph over short-term market movements because of the Solana ecosystem’s strong fundamentals.
With DEX volume now rivaling Ethereum’s and more companies betting on SOL as a strategic digital asset reserve, this not only improves liquidity but also boosts long-term demand.
The 50% Fib level appears to have already triggered the next rebound. However, if short-term pressure continues to drive SOL towards the critical 61.8% Fib level at about $155, this could become a major demand zone.
