Solana (SOL) has gone down by 1.3% in the past 24 hours, and it is once again retesting the $100 level as bearish sentiment persists ahead of the Federal Reserve’s interest rate decision tomorrow.
Trading volumes have jumped by 40% as buying interest at this psychological price level seems to be strong. However, the market’s depressed sentiment should push SOL down to $96 to retest key areas of support that have acted as a bouncing pad for Solana in the past.
The market is confident that the Federal Open Market Committee (FOMC) will not raise rates during this meeting, as rate hike odds are currently standing at just 9%.
Hence, any surprises on this front could dramatically hit crypto prices. The market will scrutinize the words of the head of the U.S. central bank, Kevin Warsh, to get hints on what to expect during the December meeting, as the baseline scenario is that a 25 basis points hike will be implemented then.
Sentiment has turned bearish in the past few weeks, as the Crypto Fear and Greed Index is sitting at 43, right at the intersection between Neutral and Fear.
Meanwhile, Solana successfully implemented the Alpenglow upgrade last week, reducing the network’s transaction settlement times from 12.8 seconds to 150ms or less. This technical overhaul could kick off a new era for the blockchain at a point when adoption of blockchain technology across the globe is accelerating.
On-Chain Data Favors Bearish Outlook for Solana
That said, although the long-term outlook for SOL is bullish, the short-term outlook is not. On-chain data indicates that ecosystem usage has been dropping four weeks in a row.
During this period, app fees have plummeted from $115 million during the week ending on October 4 to $72 million as of last week, meaning a 37.4% decline.
Similarly, weekly DEX volumes have experienced a strong retreat since September 20, dropping from $19 billion to $12.3 billion as of last week.
The latest pullback that the crypto market has experienced has also depressed Wall Street’s sentiment toward SOL, as net inflows to exchange-traded funds (ETFs) swung to negative territory in October.
Data from SoSoValue indicates that investors have withdrawn $80 million from these vehicles this month, down from a positive figure of $271 million. This also represents a shift from the two-month uptrend that this metric had experienced.
Solana Price Forecast
Every new Solana analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Solana forecastsSOL Could Drop to $77 If This Support Level Falters
Turning to the charts, the daily time frame shows that SOL has not yet hit what we see as the two most relevant areas of support for this token — the 200-day exponential moving average (EMA) and the $96 level.
A strong bounce off these price zones could mark the beginning of a recovery to $110 at least, although this will not yet push SOL out of bearish territory.
Momentum is still favoring sellers as the Relative Strength Index (RSI) has dropped to 33. Getting closer to oversold territory increases the odds of a reversal for SOL. Hence, if these two levels hold, that would confirm that the token could begin to recover in the next few days.
Otherwise, if the $96 area is broken, SOL could experience a strong decline to $84 – $77 to correct a previous imbalance that emerged during the late August rally.