Solana (SOL) has been facing a period of consolidation, with its price fluctuating between $87 and $77 in recent weeks. However, recent developments in the market suggest that the cryptocurrency could be at risk of a significant downturn.
A bearish pattern has emerged, and shifting investor behavior could trigger a price crash, with potential losses of up to 38% if SOL breaks below key support levels.
Rising Concern: Solana STHs Profits
One of the key indicators raising concern for Solana is the LTH vs. STH NUPL (Long-Term Holder vs. Short-Term Holder Net Unrealized Profit/Loss). Since February, the unrealized profits of short-term holders (STHs) have been steadily climbing.
STHs are typically quick to sell when they see profits, and this could add significant selling pressure on Solana’s price. The absence of a similar profit rise among LTHs means that there is less stabilization from long-term holders.
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In fact, if the LTHs were to panic sell as well, it could further exacerbate the downward pressure on the price. The lack of support from these long-term holders raises the risk of intensified selling in the market.
Solana Faces Increased Selling Pressure
The overall macro momentum for Solana is showing signs of weakness. The Exchange Net Position Change indicator has highlighted a rising trend in exchange inflows, which signals increased selling activity.
Over the last four weeks, this indicator has consistently noted that Solana is facing selling pressure from investors, further contributing to the bearish sentiment surrounding the asset.
As more Solana holders sell their holdings, the downward pressure on SOL could intensify. This increasing sell-off could compound the bearish pattern forming on the charts, making it more likely that the price will break down below critical support levels.
SOL Price May Fall Out Of The Flag
At the time of writing, Solana is trading at $83, remaining rangebound between $77 and $87. The formation of a bearish flag pattern indicates that the price could experience a significant drop if it breaks below the $77 support level. A breakdown below this level could set Solana up for a 38% crash, with the price potentially falling to as low as $51.
In order for this crash to occur, the selling pressure would need to continue rising, and Solana would need to break the $64 support level. If this happens, the price could fall to $57, $51, and eventually $45, validating the bearish pattern.
However, if investor sentiment shifts and focus turns toward supporting a recovery, Solana’s price could break out of the consolidation. If SOL manages to breach resistance levels at $88 and $96, it would invalidate the bearish outlook, potentially sending the price upward toward $100, marking a monthly high.
