Solana Price News: SOL Could Still Lose Another 20% Despite Today’s Bounce

Solana (SOL) has jumped by 3% in the past 24 hours and is breaking a 4-day losing streak as sellers seem ready to take a breather. However, a closer look at its price action indicates that a 20% downside risk persists.

Trading volumes during this period increased by nearly 90%, currently sitting at $3.7 billion and accounting for almost 8% of the token’s circulating market cap.

On Good Friday, the market will keep an eye on March’s employment data within the United States to gauge the impact of artificial intelligence and higher tariffs on the country’s economy.

Crypto ETFs Broke a 4-Week Streak of Positive Inflows

Data from CoinShares indicates that crypto-linked exchange-traded funds (ETFs) recorded their first weekly outflows in five weeks, with a total of $414 million flowing out of these products.

Last Week Net Inflows to Top Crypto ETFs – Source: CoinShares

Analyst James Butterfill, head of research at CoinShares, emphasized that investors seem to be “worried over the increasingly drawn-out nature of the Iran conflict and the prospects of higher inflation.”

Oil prices have jumped back above $100 after briefly dropping below the $90 threshold, as the Strait of Hormuz remains closed. High energy prices are a reason for concern, as investors expect that this supply shock could result in a spike in inflation levels.

Higher inflation could prompt the Federal Reserve to take a hawkish stance on interest rates and keep them unchanged for longer than expected. This is bad news for risky assets like cryptocurrencies, especially if the Iran war lasts longer than expected.

The Fear and Greed Index reflects this bearish sentiment, as it dropped from a recent peak of 46 (Neutral) to 27 (Fear) at the time of writing.

Solana Could Drop by Another 20% If This Happens

The daily chart for Solana shows that the price bounced after hitting the $80 level. This is a normal “technical” bounce that tends to occur when the price hits a major round number.

SOL/USDT Daily Chart – Source: TradingView

Significant volumes of institutional “buy” orders may have stood at that particular level. This increases the odds of “dead cat” bounces during market downturns.

However, it does not indicate that the market is ready to turn around. For that to happen, we would have to break the $90 barrier once again to confirm that SOL is ready to make it out of consolidation.

Meanwhile, the Relative Strength Index (RSI) has entered bearish territory after hitting 40. The indicator has also dipped below the 14-day moving average, meaning that bearish momentum is accelerating.

The key support to watch over the next few days would be the $78 area. If the price dips below that mark, then SOL could experience a stronger decline and retest the $67 low from February 6. This means a 20% downside risk based on today’s price.

Liquidation volumes are not yet high enough to indicate that the market has broken a key level. If a significant volume of long positions is blown up after SOL loses the $80 support, that could result in cascade liquidations that push the token rapidly to this bearish target.