Solana Battles at $200: Is an Extended Downfall to $175 on the Horizon?

As Solana struggles near the $200 psychological mark, is a downfall to $175 inevitable?

While Bitcoin struggles near the $100,000 mark, the short-term recovery in altcoins is facing setbacks. Failing to sustain the recovery momentum, altcoins like Solana are experiencing sudden reversals, resulting in quick turnarounds.

SOL’s price trend shows a bullish failure, leading to a Morning Star pattern and a drop near the $200 psychological mark. As Solana bulls struggle to hold the $200 level, will a second bearish wave trigger an extended downfall?

Solana Technical Analysis: Rising Bearish Signs 

In the 4-hour chart, the SOL price trend reveals lower rejections to reclaim the $200 psychological mark. Avoiding a closing price under the $197 support, the recovery run in Solana peaked at a 24-hour high of $220.

However, a bearish engulfing candle followed through. This resulted in a price drop of $205, marking a 4.5% drop in the last 4 hours.

With this quick turnaround, Solana failed to surpass the 38.20% Fibonacci level. Furthermore, it failed to breach the red line of the super trend indicator, highlighting the prolonged bearish trend.

Additionally, the stochastic RSI line has given a bearish crossover in the overbought territory. Hence, the technical signals and candlestick patterns hint at an extended downfall in Solana.

Derivatives Market: Bullish Sentiment Rise 

Despite strong selling signals in the daily price chart, the derivatives market witnessed a minor increase in bullish speculations. The funding rate has recovered significantly from -0.0611% to 0.0013%, indicating a key turnaround among traders to hold bullish positions.

Furthermore, the number of bullish positions has slightly increased as the long-to-short ratio rises to 0.9759. However, the ratio still highlights a slightly greater number of bearish positions at play.

On the other hand, the open interest in Solana derivatives has dropped by 0.71%, sustaining at $5.5 billion.

In sum, the recovery has fueled bullish sentiments among Solana traders, reflected by the improved funding rate and long-to-short ratio.

Solana Network Growth With Rising Cross-Chain Activity 

Along with the bullish speculations, the Solana network witnesses growth in cross-chain activity. In a recent X post, SolanaFloor reported that Solana experienced over $1.45 billion bridged from other chains in January. This highlights the growing confidence and adoption of the Solana ecosystem by developers.

Furthermore, in a recent interview, CavemanDhirk, co-founder of DeFiTuna, stated they built on Solana for three simple reasons: faster, better, and easier.

While Ethereum had a head start and continues to dominate the field, a shift from Ethereum to Solana is likely as more developers explore its potential.

Can Solana Recover, or Will Bears Dominate?

With the price action analysis maintaining a bearish approach, the rising bullish fundamental signals project a potential long-term recovery.

However, the Fibonacci levels paint crucial support at $175, which will likely be tested if buyers fail to hold the position at the $200 psychological mark.

On the flip side, a lower price rejection crossing above the 38.20% Fibonacci level will serve as a key bullish signal. If a breakout rally occurs, the uptrend in Solana could surge to $243.50, near the 61.80% Fibonacci level.