Solana Price Risks Breakdown to $110 As On-chain Metric Turns Bearish

Solana price dropped from $164 on Friday to $141 on a low-volatility weekend, registering a 14% loss. This pullback can be attributed to a significant decline in classic on-chain activity, including active and new addresses. Will SOL’s price regain bullish momentum as Bitcoin drops below $60000?

Will SOL ETF Spark a Bullish Rally?

On Wednesday, August 7th, the Brazilian Securities and Exchange Commission ( CVM ) approved the first Solana ETF. This move provides Brazilian investors with early access to the diversified product of Solana (SOL) cryptocurrency, ahead of U.S. investors, where similar applications are still under review by the SEC with uncertain outcomes.

According to a recent report from Exame, QR Asset and Vortx will manage the ETF, while the launch approval depends on the Brazilian stock exchange (B3). This ETF will track the CME CF Solana Dollar Reference Rate, supported by CF Benchmarks and the Chicago Mercantile Exchange (CME).

The anticipated launch will attract significant inflow into Solana from the traditional market, potentially driving up demand for SOL.

Solana Price Signals Bearish Reversal

Most major altcoins witnessed notable recovery this week, as the Bitcoin price rallied from $49600 to $58398, registering a 11% growth. Following the bullish momentum, Solana price surged from $110 to $163 before settling back down to $142. Subsequently, its market capitalization decreased to $66.6 billion.

This pullback below key daily Exponential Moving Averages (20, 50, and 100) may accelerate the selling momentum for a prolonged downfall. Should concerns over market correction continue, a potential breach below $150 support could plunge SOL price 16.5% to $126 as it tests the triangle pattern support.

Market Suffers as User Engagement Plummets

A downturn in key on-chain metrics reinforces a bearish perspective for Solana price prediction. According to data from TheBlock analytics, the number of new addresses engaging with the network decreased from 1.27 million on August 1st to 980.68k, reflecting a 22.79% reduction.

Additionally, the active addresses metric also dropped from 2.09 million to 1.6 million, a 23.44% decline. These significant decreases in fundamental on-chain metrics indicate waning user activity, potentially heralding further declines in SOL’s market value if the trend persists.

On the contrary, the Solana price showcases a mid-term sideways trend in the daily chart amid the formation of a symmetrical triangle pattern. The chart pattern consists of two converging trendlines, which lead to a temporary consolidation for the prevailing trend to regain momentum.

The Average Directional Index (ADX) below 25% suggests that the sellers are losing their grip on this asset. 

Thus, the price rebound from triangle support will prolong the lateral trend and prevent a major correction. If successful, the buyers could breach the overhead trendline trend and bolster the Solana price rally above $200 psychological level.