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Solana (SOL) Price Forecast: This $2.7 Billion signal could prevent $250 breakout

By:
Ibrahim Ajibade
Updated: Mar 31, 2024, 10:36 GMT+00:00

Key Points:

  • Solana (SOL) has established a steady support above $195, after hitting a daily timeframe peak of $200 on March 31.
  • Since hitting the 2024 peak of $210 on March 18, Solana holders have un-staked 14 million SOL.
  • On the daily timeframe chart Solana's Relative Strength Index (RSI) signals the market is approaching over bought territories.
Solana (SOL) price forecast

In this article:

Solana (SOL) has established a steady support above $195 on March 31, as bulls brace up for an imminent above the $200 level in the week ahead. On-chain data trends has unveiled a bearish signal among Solana network validators.

Can SOL withstand the looming selling pressure and breakout towards $250, or will the bulls succumb to another $175 reverse?

Solana Node Validators diluting market supply with $2.7 billion move

Solana has been, arguably, the most in-demand altcoin in the cryptoccurency in March 2024. With the latest upswing above $195 on March 31, SOL price is now on course to end the month with 70% gains, having added over $60 billion to its market capitalization.

But notably, despite the teeming demand for SOL amid the ongoing memecoin sector boom, Solana price has failed to reclaim the 2024 peak of $210, recorded on March 18.

A closer look at the underlying on-chain data shows the SOL price rally deceleration could be down to unusual bearish trend observed among Solana node validators, which has put a significant downward pressure on SOL in the last two weeks.

The StakingRewards chart below shows real-time changes in the number of SOL coins that node validators and other network validators currently have deposited in staking contracts.

Solana (SOL) Staked vs Price | March 31, 2024 | Source: StakingRewards.com
Solana (SOL) Staked vs Price | March 31, 2024 | Source: StakingRewards.com

Solana node validators began to unstake their coins around March 18, just as SOL price claimed a new 2024 peak above $209, as depicted by the blue trendline in the chart above.

At close of March 17, a total of 374.5 million SOL was held in staking contracts. But since the investors have unstaked 14.3 million SOL in the last weeks, bringing the total staked assets down to 360.2 million at the time of writing on March 31.

When valued at the current prices the newly-unstakeed 14.3 million SOL is worth approximately $2.7 billion.  And notably, over 10 million SOL of that was unstaked within the last 24 hours after Solana price retested $200 terriotry on March 30.

When node validators unstake their coins during market rally, it means the stakholders anticipate an imminent reverse, hence they’re looking to take profits or explore other asset diversifications options.

This impacts prices negatively for two major reasons. Firstly, introducing over $2.7 billion worth of previously-staked coins into the market supply within supply, has a tendency to flood the market and destabilize the demand and supply dynamics.

Also for any Proof of Stake (PoS) network, reduced staking is critical to network security. Given Solana’s recent history of network outages amid intense market activity, this particularly puts SOL at an heightened increased risk of a negative outcome.

In summary, stakers and node validators flooding the market with $2.7 billion worth of coins over the past two weeks, partly explains why Solana price has failed to reclaim the $210 territory since March 18, despite stream of new demand and capital inflows generated by the memecoin boom.

Solana (SOL) Price Forecast: Possible reversal below $180

As SOL price retested $200 on March 30, Solana stakers responded by flooding the market with another $1.9 billion worth of SOL within the last 24 hours. This puts Solana price at risk of a major reversal below $180 in the week ahead.

To avoid such a large price reversal SOL bull have to establish a steady support base above the $200 milestone. However, Solana Relative Strength Index (RSI) is  now trending at 65.8 mark, showing that the market is approaching overbought territory.

If this dissuades new entrants, and the node validators keep flooding the market, a downturn towards $175 seems likely.

Solana (SOL) price forecast |March 31, 2024 | Source: TradingView
Solana (SOL) price forecast |March 31, 2024 | Source: TradingView

But if the stakers simply move the unstaked 2.7 $billion coins into Solana’s raving DeFi protocols and rallying memecoins, rather than exit, Solana price could avoid a downswing and instead stage a decisive breakout towards $250.

About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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