Solana Price Shows Mild Bullish Signs
Solana (SOL) traded above $220 on Wednesday, showing mild bullish signals. The short-term outlook for SOL matches the broader crypto market, which is recovering after Tuesday’s dip. Buyers aim to push the price toward the $250 resistance level. This optimism is driven by the “Uptober” trend and hopes for US SEC approval of related ETFs. However, a steady drop in on-chain activity raises caution for investors. This decline could make it hard to keep the recent gains.
On-Chain Activity Declines on Solana
Solana’s DeFi Total Value Locked (TVL) fell by over 3% in the last 24 hours. TVL shows the total value of coins in smart contracts on Solana. It dropped from $12.91 billion on Tuesday to $12.48 billion on Wednesday. When investors move assets out of staking contracts, it often means they plan to trade or sell. A falling TVL signals weaker confidence in the Solana ecosystem.
The number of active Solana addresses has also dropped sharply. Weekly data from DefiLlama shows 6.2 million active addresses between October 6 and 12. This is down from 33.33 million in late May. Fewer active users suggest lower demand for SOL.
Transaction volume on Solana has decreased too. The network recorded 173.72 million transactions in the week of October 6-12. This is a big drop from 613.14 million transactions in late July. With less on-chain activity, bulls may struggle to keep the price rising. Investors should expect possible high volatility and price pullbacks.
Technical Outlook: Support and Resistance Levels
On the 4-hour chart, Solana trades between the 200-period EMA support at $218 and the 100-period EMA resistance at $222. The Relative Strength Index (RSI) rose to 42 after hitting 35 earlier, showing some bullish momentum. If RSI moves above the midline, SOL could break above the 100-period EMA ($222) and 50-period EMA ($224) resistances.
Traders will watch for a move above the descending trendline to confirm a rise toward the $250 resistance. However, SOL could still fall below the 200-period EMA support at $218. The next support zone is around $204.
