Solana Faces 20% Price Correction, Investors Frustrated

Solana, a high-performance blockchain platform, has been making headlines recently due to several significant developments and challenges. One of the key events was the statement by Treasury Secretary Scott Bessent, who highlighted the growing recognition of Bitcoin as a store of value. This statement had a ripple effect across the crypto market, including Solana, as it sparked discussions about the broader implications for the entire cryptocurrency ecosystem.

Despite the overall market sentiment, Solana has faced significant price corrections, erasing gains made in mid-March. This has led to a wave of frustration among investors, many of whom have chosen to sell their holdings and exit the market. The Realized Profit/Loss (RPL) indicator shows that Solana has been underperforming for most of February and March, with brief moments of profit for short-term holders (STHs) but an overall bearish trend. This has contributed to mounting frustration among investors, leading many to consider selling their positions. The selling pressure is keeping the market from recovering as more and more investors choose to cut their losses.

Solana's technical analysis reveals that the asset is forming a bullish double-bottom price action pattern on the daily time frame. However, the pattern is not yet complete, as the daily chart currently shows a single leg with two bottoms at the key horizontal support level. In addition to the bullish price action pattern, Solana’s daily chart has also formed a bullish divergence, indicating that the asset is poised for a massive upside rally. Based on the recent price action and historical momentum, if Solana’s price remains above the support level, there is a strong possibility it could soar to higher levels in the future.

This shift in sentiment and the strength of Solana’s upside momentum are putting short positions at risk of liquidation. Data reveals that traders are currently over-leveraged, with key levels holding significant amounts of long and short positions. While examining the on-chain metrics, it appears that the bulls are back and currently dominating the asset. This suggests that despite the recent challenges, there is still a strong underlying support for Solana within the crypto community.

Solana's price is currently struggling to recover from the recent losses. Despite the slight uptick observed, the altcoin’s recovery remains uncertain. With investor confidence at a low, the price may continue to struggle in the short term. The aforementioned factors suggest that Solana could dip further, extending investors’ losses. If the bearish trend continues, Solana could test this support level before any potential signs of recovery emerge. This price action would keep investors on edge and delay any sustained rally.

However, if Solana can reclaim a support floor, it could spark a reversal. A breach of this level would push the altcoin toward higher levels, and flipping it into support would significantly bolster the bullish thesis. In this scenario, Solana could break through resistance levels and rise toward higher levels. This would indicate a strong recovery and renewed confidence in the asset, potentially attracting more investors and driving further growth.