Solana Faces 14% Drop to $120 Amid Bearish Patterns

Solana (SOL) is currently facing a bearish outlook, with its daily chart indicating a potential drop to $120. This forecast is based on the formation of a bearish engulfing pattern and a head-and-shoulders pattern on the 1-day time frame. The breakdown below the $140 neckline level, confirmed by a volume spike, could lead to a bearish continuation, with the downside target from the head-and-shoulders pattern around $126. However, the daily demand zone, outlined by the order block between $95 and $120, could be tested over the next few weeks, providing a strong source of buyer demand.

Despite the bearish outlook, there are several factors that suggest a potential recovery for SOL. Onchain data shows that the Network Value to Transactions Ratio (NVT) has dropped below 10, its lowest score since February 2025. This indicates strong network usage relative to its market value, suggesting long-term potential despite SOL’s price fluctuating under $150. Additionally, the Exchange Net Position Change chart reveals consistent SOL withdrawals from exchanges, a trend that has recently begun to rise again. This indicates growing investor confidence, as holding SOL off exchanges often signals accumulation for future gains. The data shows a significant net outflow, with peaks of -4.6 million SOL on May 28, followed by a recent uptick in deposits, which falls in line with the price’s current dip.

While Solana’s price has faced volatility, dropping from a high of $295 in early 2025, the onchain metrics suggest underlying strength. The stable NVT and increasing exchange outflows highlight robust network activity and investor accumulation, overshadowing short-term price bearishness. This price correction may also help to stabilize the market, reducing the volatility that has characterized the cryptocurrency space in recent months. Additionally, a lower price point could attract new investors who have been hesitant to enter the market due to high valuations. This influx of new capital could provide a boost to the overall market, potentially leading to a rebound in SOL's price in the future. Furthermore, the drop in price could be seen as a healthy correction, allowing the market to consolidate and build a stronger foundation for future growth.

While the immediate outlook may be uncertain, the long-term prospects for SOL remain promising, as the technology continues to evolve and gain traction in the broader market. The bearish pattern for SOL could be invalidated if the price achieves a daily close above the $157 resistance level. However, Solana has shown a strong correlation with Bitcoin throughout the quarter. With BTC potentially retesting support near the $100,000 level, increased sell-side pressure could lead to further correction for SOL. Despite the potential drop to $120, the underlying strength of Solana's network and the growing investor confidence suggest that this price correction could present a buying opportunity for those looking to invest in SOL at a lower entry point.