Solana's Velocity Drops 5-Month Low, Price Stalls Below $135

Solana (SOL) has been facing challenges in maintaining its upward momentum in recent weeks. Despite initial signs of an uptrend, the cryptocurrency is now struggling due to declining demand. The market environment is also deteriorating, contributing to these struggles. Currently, Solana is trading at $129, stalled below the key $135 barrier, with no clear indication of a breakout in sight.

The velocity of Solana has fallen to a 5-month low, signaling weakening demand. Velocity measures the rate at which an asset is circulated within the market. Solana’s current circulation levels are comparable to those seen in October 2024, indicating that the cryptocurrency is losing traction. This drop in velocity suggests that fewer investors are actively trading SOL, further adding to the bearish sentiment surrounding the token. The lack of demand makes a recovery increasingly difficult, as it implies that traders are hesitant to enter the market.

The ongoing low demand for SOL further confirms a bearish outlook. Many investors are likely waiting for a more favorable environment before committing to new positions, which could delay any potential recovery as the token struggles to attract fresh capital. Analyzing the 2-week Market Value to Realized Value (MVRV) Ratio, a key metric that tracks the average profit or loss of recent buyers, reveals that the ratio is currently below the zero line. This suggests that investors who purchased SOL within the last two weeks are now facing losses.

This situation could lead to one of two scenarios: either investors hold their positions, hoping for a price recovery, or they sell to cut their losses. If the latter occurs, increased selling pressure could push the price lower and potentially invalidate any attempts at recovery. In this scenario, the market would likely remain bearish until sentiment shifts. Solana is currently trading at $130, struggling to break through the critical $135 resistance. While there has been a short-term uptrend, the likelihood of SOL breaching this level seems low. This suggests that the price could remain range-bound for the near future.

The combination of low demand and weak market sentiment points toward a potential decline. Solana may fall through its uptrend support line, with the next significant support levels lying at $125 and potentially $118. This scenario would delay any recovery, pushing the token further into a bearish trend. On the other hand, if Solana manages to break through the $135 resistance, the altcoin’s price could push toward $148. A sustained move above this level could propel SOL to $150, invalidating the bearish outlook.