Solana’s Recent Price Drop
Solana (SOL), a prominent cryptocurrency, experienced a notable decline in its price over the past week. Despite a strong performance in December, the latest trends have shown a downturn. As of now, SOL has decreased by 4.5% in the last 24 hours, trading at around $90.7. This downturn has reduced its market capitalization to $39.2 billion, widening the gap with BNB, the fourth-largest cryptocurrency.
Surge in Trading Volume
Despite the price fall, Solana’s daily trading volume witnessed a significant surge of 39%, reaching $2.9 billion. This increase in trading activity could be indicative of market interest and potential future movements.
RSI Indicates Potential for Rally
According to data from Santiment, the Solana Relative Strength Index (RSI) is currently around 35, a considerable decrease from 73 on January 2nd. The RSI is a key indicator used to gauge market sentiment. The current low RSI suggests that Solana may be undervalued, potentially setting the stage for a rally, especially as selling pressure decreases compared to when SOL was trading at around $110 last week.
Open Interest and Funding Rates
Further insights from Santiment reveal a decline in the total open interest (OI) in SOL, falling from $1.3 billion at the start of the year to approximately $880 million. Additionally, the total funding rates for Solana have plummeted by 90% over the past week, standing at 0.008%. This decline in OI and funding rates indicates a shift in investor behavior, possibly due to strong liquidations or the closing of positions as SOL fell below the $100 mark.
The current market data suggests that for a rally to occur, Solana’s RSI would need to remain below 50. Moreover, the slight dominance of long-position holders over short-position holders indicates a cautiously optimistic outlook for SOL’s price in the near future. However, the cryptocurrency market is notoriously volatile, and investors should remain vigilant of further movements and trends.