Will Solana Price Drop Below $100 in September?
Date: 2024-09-03 Author: Henry Casey Categories: CRYPTO PAYMENTS
Solana price posted its second-biggest weekly decline of 2024, down 19.14% in late August. Previously, its largest negative weekly ROI was 25.19% in July.
Solana Open Interest Up 20% with Negative Funding Rate
With $500 million in negative net flow in the spot market in August, derivatives are now driving market price action.
Solana open interest (OI) fell 12% in 24 hours last week after the price dropped below $150. Since then, the price has fallen another 14%, but OI has risen 20% in the markets.
Open interest rising during the market decline indicates aggressive short covering by futures traders.
The negative funding rate further confirms the bearish trend. The metric has remained negative for the past week, the longest stretch since October 2023. The current funding rate of -0.001 is the lowest in 2024.
Solana DEX Weekly Trading Volume Drops to 6-Month Low
Solana has seen a decline in on-chain activity over the past month, with the memecoin hype relatively fading. Data from Dune Analytics showed weekly trading volume on the DEX at $7.7 billion, a 6-month low for the ecosystem.
In March, Solana DEX trading volume was 50% larger than Ethereum, with 24-hour trading volume regularly exceeding $3 billion.
Analyst: SOL/BTC Chart Looks Terrible
Solana and Bitcoin have shown a growing correlation in 2024, allowing the altcoin to outperform BTC in Q1 2024. With markets swinging sideways and lower in the past few weeks, this correlation has held, meaning the altcoin is experiencing bigger drawdowns than Bitcoin.
Bluntz_Capital, an independent trader, points out that SOL/BTC may be heading for another leg of decline. In a post on X, the analyst stated:
Solana Price Faces Critical Level at $127
Before retesting $100, the nearest significant support level is around $127.
Since April 2024, Solana has briefly dipped below $120 six times, but each time the altcoin has closed the daily candles above $127, which is also the lower boundary of the accumulation zone (green area). The difference this time is that SOL has lost support from the 200-day EMA (orange indicator).
Earlier, when Solana closed above $127, it also recorded a daily candle close above the 200-day EMA. SOL has closed multiple days below the EMA for the first time since September 2023, further highlighting the bearish chart structure.
If Solana loses $127, the immediate target would be $110, which would be a liquid hold for the altcoin. A pullback from $110 would be ideal for the bulls.
However, if September turns out to be an extended bearish period for the market, SOL could potentially retest the demand zone between $98 and $104 (blue area).
The worst-case scenario for SOL is a retest of $100, which would represent a 22% retracement and a new all-time bottom for the altcoin.
Therefore, if Bitcoin delivers a bullish Q4, Solana's price should not fall below $100 in September.
