Solana’s 35% Rally Faces Threat from Imminent Death Cross Amidst Bullish Momentum

• Solana price experiences a robust recovery, surging 35% following Monday’s downturn.
• Solana’s DeFi Total Value Locked (TVL) increases by $1 billion since August 8, indicating heightened bullish interest.
• Reduced liquidations in the futures market suggest potential for Solana’s price to stabilize and rise toward $200.

Solana’s recent price recovery to $150 faces uncertainty with an impending death cross, which could potentially hinder further gains.

Solana’s Price Rebounds Strongly

After hitting a low of $109 on Monday, Solana’s price has made notable strides, staging a 35% comeback. This recovery has been fueled by traders capitalizing on the dip, propelling the token back toward previous highs. The swift bounce from sub-$120 levels to $150 underscores the renewed investor interest and confidence in Solana’s prospects.

DeFi Growth Signals Strength

Solana’s DeFi TVL has seen a significant rise, surging from $3.8 billion on August 5 to $4.81 billion presently. This increase not only reflects growing investor confidence but also enhances the bullish narrative for Solana. Higher TVL generally signifies robust network activity and investor trust, which can drive further price appreciation. The influx of capital into Solana’s DeFi ecosystem may indeed play a pivotal role in pushing the price toward the $200 mark.

Reduced Liquidations Indicate Stability

Market stability is further supported by a decrease in liquidations, which have plummeted from $1 billion on August 5 to $120 million by August 7, according to Coinglass data. This drop in liquidations indicates a more balanced market, potentially reducing downward pressure on Solana’s price. As the market absorbs these changes, Solana appears to be on a steady path, with technical indicators supporting a bullish outlook.

Technical Analysis: A Double-Edged Sword

Technically, Solana is showing strength by holding above its 200-day Exponential Moving Average (EMA). The relative strength index (RSI) around 43 suggests that the token is gaining strength within the neutral territory. If the RSI surpasses the midline (50), it could trigger additional buy orders, pushing the price further upward. Key resistance levels to watch include $160, $180, and the psychological $200 barrier.

Potential Impact of the Death Cross

Despite the optimistic indicators, an impending death cross threatens this positive trend. A bearish death cross forms when the 20-day EMA crosses below the 50-day EMA, historically signaling a potential downturn. Traders should remain cautious as this pattern emerges, looking for signs of a shift towards bearish momentum. Critical support levels during a potential correction could be $140, $130, and $120.

Conclusion

Solana’s current price movement shows promise with a solid recovery, increased DeFi engagement, and reduced market liquidations. However, the looming death cross pattern suggests vigilance is warranted. Investors should weigh the positive structural support against potential bearish signals to navigate Solana’s unfolding price trajectory effectively.