Solana Faces 15% Drop to $120 Despite Bullish Onchain Data

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, which is a bearish reversal signal. If the price breaks below the $140 neckline level, confirmed by a volume spike, it could lead to a further decline.

The downside target from the head-and-shoulders pattern is around $126, supported by the immediate liquidity zone. However, the daily demand zone, outlined by the order block between $95 and $120, could be tested over the next few weeks. This zone is seen as a strong source of buyer demand, which could potentially halt the price decline.

Despite the bearish outlook, onchain data for Solana continues to paint a bullish picture. The Network Value to Transactions Ratio (NVT) has dropped below 10, its lowest score since February 2025. This suggests strong network usage relative to its market value, indicating 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.

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.

In conclusion, while the price of SOL is expected to drop to $120, there are several factors that suggest a positive outlook for the cryptocurrency. The ongoing development of the Solana blockchain, the growing ecosystem, and the potential for market recovery all contribute to a silver lining for investors. Those who are willing to take a long-term view and invest during this period of price decline may find themselves well-positioned to benefit from future price appreciation.