Solana Faces Potential Downturn Amidst Market Volatility: Where Is SOL Headed?

Source: CoinJournal

The cryptocurrency market has experienced significant turbulence lately, and Solana (SOL) appears to be caught in the crosshairs. Analysts are raising concerns about the potential bearish developments surrounding SOL, primarily driven by broader market cues and declining investor interest.

According to market experts, the so-called “Ethereum Killer” is likely to undergo a correction in the coming days, which could potentially drag its price down to the $100 level. Experts attribute this projected decline to SOL’s strong correlation with Bitcoin (BTC), the world’s largest cryptocurrency by market capitalization.

Crypto Analysts Forecast Solana Could Dip to $100 Level

Historically, Solana’s price movements have closely mirrored broader market trends, be it the meme coin frenzy or recent market corrections. As Bitcoin’s value tumbled in recent days, SOL followed suit, and this pattern could persist in the near future.

The correlation between Solana and Bitcoin has strengthened significantly after a brief dissociation in March, with the current correlation coefficient standing at a staggering 0.8. Consequently, if Bitcoin continues its downward trajectory below its current trading price of around $62,700, it is likely to exert further downward pressure on Solana’s price.

Adding to the bearish sentiment, investors appear to be losing confidence in the asset. This diminishing conviction is evident in the plunge in Open Interest (OI), a measure of the total number of outstanding derivative contracts. Over the past four days, the OI for Solana futures has plummeted from $2.89 billion to $1.84 billion, representing a $1 billion outflow from the futures market.

This massive exodus of capital suggests that investors are not only skeptical about Solana’s prospects but also unwilling to place bullish or bearish bets on the cryptocurrency, further amplifying the bearish narrative.

If the aforementioned bearish cues persist, Solana’s price could face a substantial correction from its current trading level of around $132. Analysts predict a potential 24% decline, bringing SOL down to the critical support level of $100. However, this level may provide some respite and prevent further losses.

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