Solana [SOL] tumbles again; Will a relief bounce come to rescue?

Solana’s [SOL] spot market performance has managed to catapult the asset to the top-five position. However, the asset was now moving further away from the recently established all-time high.

Needless to say that 2021 has been pivotal for the cryptocurrency industry. More so for the so-called “Ethereum killers” that noted incredible volumes throughout. Despite shedding significantly since the DDoS attack on its network, Solana has managed to retain its spot as one of the fifth-largest cryptocurrencies by market cap. Apart from the massive L1 viability, another factor that played a crucial role in its push to reduce environmental impact and achieve carbon neutrality for this year.

According to Solana Explorer, the network has conducted over 48 billion transactions to date. But it is far more energy-efficient than the likes of top assets such as Ethereum [ETH] and Bitcoin [BTC].

Big bets on Layer 1 solutions

Solana has come a long way since the beginning of the year. The latest data compiled by DeFiLlama showed the TVL figures rise to $12.13 billion.

Market experts have observed a substantial spike in capital inflow in layer-1 solutions including Solana over the past two weeks. Many think that tokens with high on-chain activity could surpass Ethereum before the end of 2021. The industry is currently witnessing a tremendous investor appetite for scalability solutions which is indicative of the increasing total value locked and the on-chain activity on the networks.

Hints of Relief Rally for Solana [SOL]

Over the past week, Solana rose by 11.76%. It was currently trading at $191.1 with a market cap of $59.72 billion and a 24-hour trading volume of $1.92 billion.

Solana’s free-fall after hitting a peak in October-November did not stop even after forming a descending channel pattern. After a brief surge, the token went on a downtrend yet again. December has been kinder to SOL but hints for an impressive break are yet to appear. The Bollinger Bands [BB] depicted a period of consolidation before a decisive move. The volume has failed to cushion the uptrend. 

On the brighter side, the 50 SMA [Pink] was on the verge of moving below the SOL price candles while the 200 SMA [Yellow] continued to hover below. 

The green closing lines of Awesome Oscillator [AO] depicted a period of bullish momentum. But the Chaikin Money Flow’s [CMF] fall below the zero-line evidenced an outflow of capital from the coin market. The Relative Strength Index [RSI] wasn’t particularly bullish either as it continued to hover close to the 50-median line, meaning, the sellers still dominate the market.

In short, a relief rally may not transpire in the near term. Solana may continue to trade between the $190-$211 region. A leg up from this zone would bring the immediate resistance level of $230 at play. Its support levels, on the other hand, were found to be at $150 and $125 respectively.