Solana Price Faces Downward Pressure as Double Top Pattern Forms and TVL Drops
The Solana price is on the verge of confirming a bearish breakout of a double top pattern, suggesting that the downtrend could continue in the coming weeks. This development is further exacerbated by declining network activity and ETF inflows, which have reduced the token’s attractiveness for investors.
Key Developments and Metrics
According to data from crypto.news, Solana (SOL) was trading at $127.7, 12.3% below its monthly high and over 48% below its September peak. The seventh-largest crypto asset could face further decline as it has formed a huge bearish pattern on the charts, with some of the network’s key on-chain metrics plummeting in recent months.
- Solana price has fallen by over 12% this month.
- Declining network activity and ETF inflows have reduced the token’s attractiveness for investors.
- A multi-year double top pattern has formed on the weekly chart.
Data from CoinGlass shows that the total value of blockchain-based DeFi protocols fell to $23.8 billion, compared to the annual peak of $35.1 billion in September. Fees generated by protocols running on Solana also fell from $31 million to $8 million over the same period. Taken together, these metrics suggest that user activity on the network has decreased, which in turn appears to have reduced investor demand for the token.
Impact of ETF Inflows and On-Chain Metrics
Demand for Solana was also hit by a slowdown in Solana ETF spot inflows. Data compiled by SoSoValue shows that the eight SOL ETFs recorded $199.2 million in the first week of trading after their launch, but have declined since then, with just $13.1 million recorded last week. Such a decline in inflows indicates weaker demand from institutional investors, which could subsequently impact retail interest.
On the weekly chart, Solana has been forming a massive double top pattern since mid-2024. Such a formation is characterized by two rounded peaks with a low in between and is often viewed as a bearish reversal signal when confirmed by a break below the neck line.
Solana price has formed a double top pattern on the weekly chart – December 29 | Source: crypto.news
Technical Analysis and Outlook
At the time of writing, Solana price appeared likely to fall below the pattern’s neckline at $120. In technical analysis, such a pattern is confirmed when the price of an asset falls below the neckline and typically leads to further downside, especially when momentum indicators are also signaling weakness.
Momentum indicators such as MACD and RSI were trending downwards at press time, suggesting that bears are dominating the market. Therefore, Solana price is at risk of falling to its April 7 low of $95 next if it fails to hold the $120 support. The level has served as a crucial floor for most of this year.
On the contrary, a strong bounce above $155 that coincides with the 50% Fibonacci retracement level could negate the bearish setup and trigger a possible rally.
For more information and the latest updates on Solana and other cryptocurrencies, visit https://crypto.news/solana-price-risks-breakdown-as-double-top-pattern-forms-and-tvl-drops/
