Solana Traders Hold Out for Fast Turnaround After SOL Price Breaks Below $200

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As a seasoned analyst with years of experience navigating the turbulent waters of the cryptocurrency market, I have seen my fair share of price swings and market corrections. While Solana’s (SOL) recent 8.03% dip below the $200 mark may be concerning to some, I find myself intrigued by the bullish sentiment among traders.

In the past day, Solana’s (SOL) price dropped by a significant 8.03%, dipping below the $200 mark for the first time since early November. This decrease mirrors the overall market downturn, leading to numerous forced sell-offs.

In spite of a substantial drop, it seems that Solana traders are anticipating the altcoin to recover from its lows rapidly. Is this possible?

Solana Still Undervalued, Bulls Hopeful

According to BeInCrypto’s analysis on December 15, Solana’s behavior appears to align with their prediction that the altcoin might find it difficult to maintain levels above $200. In their piece, they pointed out that bearish momentum had surpassed bullish strength as the price dipped below its 20-day Exponential Moving Average (EMA).

Given that Solana’s value is below $200, you might assume that traders would be prudent about betting on a price rise. However, it seems that they are not following this conventional wisdom. As per Coinglass, the Long/Short ratio for Solana is escalating. This Long/Short ratio indicates whether traders foresee a price surge or a drop, suggesting that they anticipate an increase in Solana’s value.

When the ratio rises, it shows that traders of Solana are becoming increasingly optimistic, suggesting they believe the current downturn will be temporary and brief. At present, this ratio is climbing and is close to exceeding a value of 1, indicating such optimism.

As a researcher, I’ve found that the emotional tone of this topic might be connected to certain on-chain indicators. One of these metrics I’ve been studying closely is the Market Value to Realized Value (MVRV) ratio. This MVRV ratio serves as a gauge for market profitability, helping me determine if a cryptocurrency is currently undervalued or overvalued compared to its fair value.

Normally, when the MVRV (Momentum Value Ratio of Ventures) is high, it suggests significant profits that haven’t been realized in the market yet. This could mean that holders might choose to sell as their crypto approaches a local or overall peak. Conversely, a decreasing MVRV ratio implies dwindling profits and can signal a potential zone for buying and accumulating.

Based on information from Glassnode, Solana’s MVRV ratio is at approximately 1.45, which suggests it’s moving towards an undervalued state. It’s worth noting that traditionally, the price of SOL has tended to peak when its MVRV ratio gets close to 2.83.

The decrease in the MVRV ratio suggests that Solana (SOL) could be approaching a possible accumulation period. However, whether it recovers or not largely hinges on the state of the overall market.

SOL Price Prediction: Indicators Opt Against Quick Bounce

Previously, the price trend of Solana suggested a possible rise towards $300 due to its bull flag formation. But an analysis of today’s chart indicates that this bullish outlook has now been cancelled as the Solana price dropped below the support level at $209.58.

Further on, it’s been observed that the trading volume of altcoins has been gradually decreasing, with more transactions leaning towards selling. If this pattern continues, there’s a possibility that Solana’s price might dip to around $153.97. This could potentially lead to losses for traders holding long positions and make a swift recovery less likely.

If bulls manage to keep the token above $170.75, it might bypass the extended correction. In this case, Solana could recover from below $200 and possibly reach $264.66 again.

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2024-12-20 12:12