Solana reached an all-time high of $295.83 on January 19, but has since experienced a significant wave of profit-taking, which has dragged the price down to multi-month lows, with the coin currently trading at levels last seen in October.
However, on-chain data and key technical indicators suggest that a recovery may be in the works.
Solana Reaches Capitulation Stage... What's Next for SOL?
An evaluation of the SOL/USD daily chart shows that the coin's Relative Strength Index (RSI) has dropped below 30 for the first time since June 2023, indicating that SOL has become extremely oversold. This suggests that selling pressure may be exhausted, and a price correction could be underway.
When an asset's RSI falls below 30, it is considered oversold. This is often seen as a potential signal for a price reversal or rebound, as traders may look to buy at these price lows. Historically, such oversold conditions have preceded sharp rebounds.
Therefore, if market participants interpret this as a buy signal and increase their accumulation of the coin, SOL may be poised for an upswing.
Another indicator suggesting the potential for a short-term rebound in SOL's price is the market's negative sentiment. In a post on X, renowned cryptocurrency analyst Miles Deutscher states that this altcoin is experiencing an extremely bearish sentiment, which is the worst in over a year, since it first reclaimed the $100 price level.
According to Deutscher, SOL, which "has been a top performer for so long," is now "finally reaching a capitulation moment." Capitulation refers to the stage where investors, exhausted by long-term losses, begin to panic or give up and start selling their holdings, which often signals market bottoms.
This is because, once the "weak hands" have sold, the selling pressure in the SOL market may ease, allowing buyers who are willing to accumulate the coin at lower prices to step in and drive a rebound.
SOL Near Key Support... Chances of Reclaiming $200?
SOL is currently trading at $141.67, slightly above the $136.62 support level. If the altcoin sees a resurgence of buying pressure, this support could strengthen, potentially pushing SOL's price up to $182.31, where a key resistance level is present.
Successfully breaking above this level could send the coin's price above $200, potentially reaching $222.14.
On the other hand, if the downtrend continues, SOL's price could fall to $120.72.
