Solana Price Analysis: $120 Reverse or $150 Rebound?

Solana’s on-chain metrics reveal how a decline in new users joining the network has emerged as a critical catalyst behind the 34% SOL price dip over the past month.

New-User Acquisition Rate Has Declined 51%

The global crypto market has been stuck in limbo since the April 20 Bitcoin Halving. Similar to Solana, prices of ranked mega-cap assets, including BTC, ETH, and DOGE, have all declined considerably, as investors took a cautious stance to avoid possible downside from a potential post-halving crash.

However, digging deeper, on-chain data shows that a unique set of bearish catalysts could be in play in the Solana market.

Chiefly, HelloMoon’s Daily Signer chart below tracks the number of new wallets that execute their first transaction on a given day. This helps measure the rate at which new users join the Solana blockchain network.

The Daily First Signers trend chart shows that Solana attracted 1.2 million new wallets on March 29. But curiously, it has been downhill since then. The latest day reveals that 608,298 SOL wallets executed their first transaction on April 28, marking a 51% decline from figures recorded 30 days ago.

Solana’s remarkable network growth in Q1 2024 was fueled by a flurry of investors aping in on the memecoin rave. However, amid sustained network congestion and delays in transactions, as well as a drop in the euphoria surrounding Solana’s memecoins, the new-user acquisition rate has been in a steady decline over the past month.

Typically, a decline in new-user acquisition can have an accelerated bearish impact on price action during high sell-off periods, as the underlying asset struggles to attract new demand.

With SOL price down 34% during over the last 30-days, the impact of the 51% decline in new-user activity has been obvious.

SOL Price Forecast: Bears Eyeing $125 Reverse

Solana (SOL) price dropped to 10-day low of $133 on Saturday April 27, bringing its weekly timeframe losses to 11.4%. In terms of short-term forecast, a further escalation of the 51% decline in new-user activity could see Solana price slide below $140 in the days ahead.

In further affirmation of this bearish price forecast, the lower limit of the Bollinger Band indicator suggests SOL could drop as low as $125 before finding a steady support cluster.

On the contrary, after a 34% decline over the past month, if fatigue sets in among SOL sellers, the bulls could attempt to stage a $150 retest. However, as depicted above, short-term price recovery efforts could be thwarted by the looming sell wall at the 20-day SMA price of $146.