Solana (SOL) is currently trading around $130, experiencing downward pressure after encountering resistance at the upper trendline of a falling wedge pattern. Market sentiment has weakened, particularly following the Federal Reserve's (Fed) hawkish interest rate decision, contributing to the challenges faced by SOL. On-chain data suggests that selling pressure is dominant, signaling a potential for further declines in the near term.
Fed's Cautious Rate Cut Impacts Risk Assets
The cryptocurrency market experienced a downturn following the Federal Open Market Committee (FOMC) meeting. As anticipated, the Fed implemented a 25-basis point rate cut, bringing the range to 3.50%-3.75% after a two-day policy meeting. However, the Fed also hinted at a possible pause in easing in January.
Furthermore, policymakers' projections of only one 0.25% rate cut in 2026 – similar to forecasts made in September – tempered market expectations and exerted short-term pressure on risk assets. This cautious approach from the Fed triggered risk aversion, leading to price declines for assets like Bitcoin, Ethereum, Ripple, and Solana during Thursday's trading session. The market interpreted the Fed's actions as less dovish than hoped, contributing to the overall negative sentiment.
On-Chain Data Indicates Bearish Signals
Data reveals increasing selling pressure on Solana. The Taker CVD (Cumulative Volume Delta) for SOL has turned negative. This indicator measures the difference between buying and selling order volume over the most recent three-month period. A positive and rising 90-day CVD indicates a "Taker Buy Dominant" market phase. Conversely, when the index turns negative and continues to decline, it reflects a "Taker Sell Dominant" state. This shift suggests that more traders are actively selling SOL than buying it.
Additionally, the Futures Average Order Size indicator is showing an increase in smaller-sized orders. This suggests growing participation from retail investors, a factor that is often not conducive to positive price action for SOL. The increase in smaller orders implies that the market is being driven by less experienced traders, which can lead to increased volatility and potentially unsustainable price movements.
Solana Price Prediction: Rejection at Key Level
Solana's price continues to face pressure after being rejected at the upper trendline of the falling wedge pattern. SOL decreased and is trading around $130.99.
If selling pressure persists, SOL could extend its correction towards the November 21st low of $121.66. The current market conditions suggest that a further decline is possible, and traders should be prepared for a potential test of this support level. It's crucial to monitor trading volumes and market sentiment to assess the likelihood of a continued downtrend.
On the daily timeframe, the RSI is at 40 – below the neutral 50 threshold and still sloping downwards – indicating that bearish momentum remains dominant. This technical indicator reinforces the bearish outlook for Solana in the short term.
However, in a recovery scenario, SOL could regain momentum and retest the 50-day EMA at $151.60. A successful break above this level could signal a shift in market sentiment and potentially lead to further gains.
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