Solana Price Faces Crash Risk Amid Mixed On-Chain Activity and Exchange Position Changes

• Solana (SOL) has formed an ascending wedge pattern since the start of the month, often indicating a potential price pullback.
• On-chain data shows strong network growth, with over 8 million new addresses joining the network in a 24-hour period.
• Exchange position change data suggests that long-term holders are exerting stronger influence, reducing buying pressure and increasing the probability of a breakdown.

The Solana price is currently trading near $144 and is forming an ascending wedge pattern, a bearish continuation pattern that projects a potential 9.5% decline to $129 if the structure resolves lower. This pattern is a common technical indicator suggesting a possible near-term correction in price.

On-chain activity for Solana has been robust, with more than 8 million new addresses joining the network in a 24-hour period. This surge in on-chain activity reflects strong investor participation and growing demand for SOL. The growth is attributed to DeFi activity, memecoins, and high-throughput applications attracting new participants.

However, exchange position change data indicates a shift in influence from new participants to existing holders. Long-term participants have weakened in their buying pressure, which is now being offset by new capital inflows. This shift suggests that selling pressure may dominate, increasing the likelihood of a breakdown from the current wedge pattern.

What Drives the Current Price Volatility?

The current volatility in Solana's price is driven by the interplay between on-chain activity and exchange position changes. While the surge in new addresses indicates strong demand, the weakening buying momentum from long-term holders introduces uncertainty. This dynamic creates a scenario where legacy supply could outweigh new demand, leading to price weakness.

Technical indicators also play a role in assessing the potential for a price correction. A breakdown from the ascending wedge could lead to a potential 9.5% decline to $129. If the price breaks down from the wedge, it would likely push SOL toward $136 initially, with further support at $130.

What Does the On-Chain Data Indicate About Solana’s Future?

On-chain data provides a mixed picture of Solana's future. While the network has seen significant growth in active addresses, reaching 27.1 million in the past week, the Network Growth indicator has been declining. This decline suggests that adoption may be slowing, which could impact the network's ability to sustain price momentum.

The Network Growth metric measures the weekly total number of addresses coming online on the blockchain for the first time. A high Network Growth indicates an influx of new users, which is typically a sign of a healthy market. Conversely, a low Network Growth suggests limited new user participation, which can be a sign of potential challenges in sustaining price momentum.

How Is Institutional Interest Affecting the Market?

Institutional interest in Solana is on the rise, as evidenced by the significant inflow into Solana-linked exchange-traded funds. The assets in these ETFs have climbed to $1.2 billion, indicating growing institutional confidence in Solana. This increased institutional backing could potentially trigger the next wave of market expansion for the altcoin.

The growth in institutional interest is supported by technical indicators, which are flashing early buy signals. This surge in demand supports a bullish Solana price prediction heading into the next phase of the market. However, it is important to note that while institutional confidence is high, the market is still subject to the dynamics of on-chain activity and exchange position changes.