The price of Solana (SOL) has experienced a sharp decline of 8.03% over the past 24 hours, marking the first fall below the $200 level since early November. This decline comes in addition to widespread weakness. larger of the market, leading to significant liquidations.
Despite the significant decrease, it seems that Solana investors predict this altcoin will quickly recover from its low level. Can this happen?
Solana Still Undervalued, Investors Hopeful
Solana’s price movement is in line with TinTucBitcoin’s analysis on December 15, which stated that the altcoin may struggle to sustain above $200. In the article, we showed how the bears outperformed the dominant bulls when the price broke below the 20-day Moving Average (EMA).
With Solana under $200, it is expected that traders will be cautious when betting on price increases. But that’s not really the case. According to Coinglass, Solana’s Long/Short ratio is increasing. The Long/Short ratio shows whether traders expect the price to increase or decrease.
When this ratio decreases, it means that the average expectation is bearish. But now, the ratio is increasing and is about to cross the 1 mark. This increase shows that Solana traders are confident that the recent decline is only temporary.
This sentiment may also be related to the health of certain indicators on the blockchain. One of them is the Market Value to Real Value (MVRV) ratio. The MVRV ratio measures returns in the market and indicates whether a cryptocurrency is under or overvalued relative to its fair value.
Typically, a high MVRV ratio indicates high unrealized profits in the market. In this case, holders will be willing to sell as the cryptocurrency approaches the local or market top. However, a falling ratio indicates falling profits and is seen as an opportunity for accumulation.
According to Glassnode data, Solana’s MVRV ratio is currently at 1.45, approaching the underrated zone. Historically, SOL prices usually reach a market peak when the MVRV ratio reaches around 2.83.
This decrease in the MVRV ratio indicates that SOL may be about to enter a potential accumulation phase. However, the ability to recover depends on the general market situation.
SOL Price Prediction: Indicators Against a Fast Recovery
Solana previously formed a bull flag pattern that showed the possibility of reaching $300. However, a review of the current daily chart shows that this outlook is no longer viable as SOL price has slipped below the support line at $209.58.
Further, altcoin trading volume has continued to decline, mainly favoring sellers. If this trend continues, Solana’s price could fall to $153.97, putting traders with long positions at a loss and reducing the likelihood of a quick recovery.
Conversely, if the bulls prevent the token from falling below $170.75, a prolonged correction could be avoided. Solana could then recover from below $200, possibly rising to $264.66.