Solana network activity has increased significantly and the current SOL price drop could be short-lived and lead to a trend reversal soon.
Amid a sharp sell-off in the broader cryptocurrency market, ethereum Layer-1 competitor Solana is also facing some selling pressure. In the last 24 hours, the price of Solana (SOL) has plummeted by more than 3%, falling below $70.
SOL is trading nearly 10% below its 2023 high reached last week; However, it still maintains 13% gains on the weekly charts.
Solana price continues to maintain its position above $66. There is a major bullish trend line emerging with support around $65.00 on the 4-hour chart for the SOL/USD pair.
Photo: TradingView
This trend line aligns closely with the 50% Fibonacci retracement level of the upward move from the low of $53.50 to the high of $77.72. Immediate resistance to the upside is around $72.00, followed by a more substantial barrier near $75.00.
The main resistance level currently sits at $78, and a successful close above this level could pave the way for a more extensive upward move. The subsequent key resistance lies near $82.50, and further gains could push the price towards the $86.52 level.
In the event that SOL struggles to break above the $72.00 resistance, the downward momentum is likely to persist. Initial support is anticipated around the $68.00 level, with the main support at $65.00, coinciding with the trend line. A break below this support could lead to a test of $62, and a subsequent close below $62 could lead to a drop towards the $55 support in the near term.
DeFi and nft Demand on Solana
The Solana blockchain network has seen a sharp increase in activity, especially in the decentralized finance (DeFi) and nft market. Additionally, Solana has seen an increase in total value locked (TVL), reaching around $670 million as of December 5, according to data from DefiLlama. However, this figure still remains significantly below the levels recorded in the last quarter of 2021, during which the SOL price rose to over $250 and the TVL surpassed $10 billion.
The Solana blockchain has attracted attention by surpassing ethereum in nft trading volumes on Friday. This increase in commercial activity for Solana marks the culmination of a successful week for the network.
Jito, a liquid staking protocol, held a substantial airdrop on Thursday, distributing $165 million in its native token to users. The following day saw a significant increase in Solana nft sales, with transactions totaling nearly $15 million. Following the success of Jito, Solana-based Kamino Finance is also preparing for a points program alongside its token drop.
In particular, there was a notable uptick in activity on Tensor, an nft marketplace built on Solana, potentially fueled by speculation about another upcoming airdrop. On Friday, Solana's “Tensorians” nft collection topped the sales volume charts, experiencing a sales volume increase of more than 100% last week, according to CryptoSlam.
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