Solana Plunges, Death Cross Looms; Traders Eye $130 Buy Opportunity

Solana (SOL) price has been on a downward trajectory, with a nearly 9% decline on the day, approaching the $130 support level for the first time since September 18, 2024. Two key indicators on SOL's daily chart are nearing a bearish crossover, which could signal new lows below $100 if completed. The 50-day and 200-day exponential moving averages are on the verge of a "death cross," a historically ominous sign for most cryptocurrencies.

However, traders may be inclined to buy Solana under $130, as the crypto asset is currently in the "golden zone" between the 0.5 and 0.618 Fibonacci retracement levels. The $130 level has historically served as a strong support during the six-month consolidation period in 2024, near the 0.618 level. As a result, SOL might consolidate and form a bottom between $130 and $150 over the next few weeks, considering the level's historical and technical relevance.

The relative strength index (RSI) for Solana has dropped below the 30 level for the first time since June 2023. On the previous two occasions when the RSI was this deeply oversold, it marked a trend bottom, suggesting that a price reversal or oversold bounce could occur in the short term. Additionally, the recent price action has led to a significant decline in Solana's market sentiment and mindshare, with commentators noting that SOL is experiencing a "capitulation moment."

Despite the bearish sentiment, there is a possibility of mean reversion for Solana. After a 50% correction, the likelihood of a deeper correction could be limited for the altcoin. The upcoming SOL token unlocks are well-known among investors, and it's possible that the event is already priced in. As such, traders may be looking for opportunities to buy SOL at these discounted levels, anticipating a potential rebound in the future.