Solana's 50-day EMA in peril, will a scenario of an additional 20% crash become a reality?

▲ Solana (SOL) / ChatGPT generated image ©

A bleak forecast has emerged that Solana (SOL), which recently turned to a downtrend, is threatening key support levels and faces the risk of an additional crash of over 20% in the future.

According to investment media FXStreet on July 8 (local time), the SOL price is down 3% as of Wednesday, continuing its decline due to the influence of the upper resistance level that limited the rebound trend last week. As risk aversion sentiment spreads across the market, institutional investor capital inflows are slowing, and even open interest has turned to a decline, significantly weakening short-term buying pressure.

Indeed, futures market indicators clearly show the weakening investor sentiment. According to SosoValue and Coinglass data, SOL futures open interest decreased by 4% to $5.31 billion in the past 24 hours, and trading volume also fell by 8% to $8.66 billion. The funding rate slightly increased from minus 0.0042% the previous day to 0.0029%, but this suggests that retail investors' buying demand is mixed, struggling to find a short-term direction.

Decreased institutional buying is also fueling the price decline. As of Tuesday, capital inflows into Solana spot ETFs (SOL ETFs) recorded $1.67 million, a significant decrease compared to the $8.36 million inflow on Monday. This is interpreted as a sign that strong demand for Solana among institutional investors is gradually slowing down.

Pessimistic signals are also detected from a technical perspective. Currently, SOL is approaching the key support level of the 50-day Exponential Moving Average (EMA) at $76.67 and the Fibonacci 50% retracement level at $76.92. If this range breaks down and the price definitively falls below the support level, the next support level, which is the previous low of $60.13, could be exposed, leading to an additional drop of approximately 22%. Furthermore, the Moving Average Convergence Divergence (MACD) is falling towards the signal line, increasing the risk of a death cross, and the Relative Strength Index (RSI) has also fallen to 54, indicating weakening buying strength.

On the other hand, for SOL to succeed in a rebound, it will first need to break through the strong overhead resistance level of $83.94. Experts diagnose that only by overcoming this downtrend resistance and maintaining a sustained upward trend will it be able to lay the groundwork for advancing to the 200-day EMA, which determines the long-term trend, at $95.51.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*