Solana Faces Market Decline but Shows Signs of Bullish Divergence

The crypto market experienced a downturn early on Saturday, extending a previous sell-off that was partially triggered by liquidity constraints following the October liquidation event. Among the notable performers, Solana remained largely unchanged at $125.94 in the past 24 hours but marked an 11% drop over the week. This continues a downward trend since mid-November. The cryptocurrency has significantly fallen from its high of $253 on September 18, losing nearly half of its market value, with a 49% decrease noted by Santiment.

Solana Struggles Amid Bearish Signals and Bearish Cross

Solana’s price decline has pushed it below critical support levels, including its 50-day and 200-day moving averages, which were recently at $179.99 and $179.93, respectively. The drop has resulted in the formation of a death cross, a bearish indicator that occurs when a short-term moving average dips below a longer-term one. Despite these technical challenges, an unexpected shift in Solana’s activity has sparked renewed interest.

Rising Activity Signals Potential Reversal for Solana

Despite the ongoing price decline, Solana has witnessed a rise in on-chain activity, signaling a potential price reversal. Santiment has reported an uptick in the number of interacting addresses and a surge in new SOL wallet creation, reaching a 10-week high.

This growing activity has led to what analysts refer to as a “bullish divergence,” a rare occurrence where market activity increases despite falling prices. According to Santiment, this trend might indicate that Solana is poised for a strong reversal in the near future.

Solana ETFs See Growth Amid Market Challenges

Adding to the positive signals, Solana’s exchange-traded funds (ETFs) have continued to attract inflows, even in the face of broader market downturns. Notably, the Bitwise Solana Staking ETF (BSOL) has seen remarkable growth, surpassing $500 million in assets under management (AUM) within its first 18 days of trading. This rapid increase has solidified the fund as the largest Solana exchange-traded product in the United States, reflecting growing investor confidence in Solana despite recent market turmoil.

The combination of rising activity on the blockchain, the growth of Solana-based ETFs, and the bullish divergence in its on-chain data could signal a shift in market sentiment. As the crypto market continues to navigate its challenges, Solana’s performance may provide a crucial indication of the broader trends shaping the industry.