The price of Solana did not exceed 135 dollars as the circulation speed of SOL fell to its lowest level in 5 months.

Although Solana (SOL) has shown signs of recovery recently, it still seems to be facing many challenges due to declining demand.

The market context is also deteriorating, adding pressure that makes it difficult for SOL to maintain its growth momentum. At a price of 129 USD, Solana is currently stuck below the significant resistance level of 135 USD, and there are no clear signs indicating that a breakout is imminent.

Declining demand hinders the growth of Solana

The circulation speed (Velocity) of Solana has dropped to its lowest level in the past 5 months, indicating a significant decline in demand. Velocity measures the rate at which an asset is traded in the market. Currently, the circulation level of Solana is equivalent to that of October 2024, clearly reflecting that this coin is gradually losing its appeal.

The decline in Velocity indicates that the number of active investors trading SOL is significantly decreasing, increasing bearish sentiment in the market. Weak demand makes Solana's recovery process more difficult, as traders remain cautious and reluctant to participate in the market.

Source: GlassnodeThe prolonged decline in demand further reinforces the bearish outlook for Solana. Most investors are waiting for a more favorable environment before opening new positions. This could delay SOL's recovery efforts as new capital is not yet ready to flow in.

Analyzing the Market Value to Realized Value ratio (MVRV) over the past 2 weeks – an important metric for tracking the average profit or loss of recent buyers – shows that this ratio is currently below 0. This means that investors who purchased SOL in the past two weeks are currently at a loss.

This situation could lead to two main scenarios:

1. The investor maintains their position, expecting the price to recover in the future.
2. Investors are panic selling to cut losses, creating greater selling pressure and pushing prices down further.

Source: GlassnodeIf the second scenario occurs, increased selling pressure could cause the SOL price to drop further, negating any recovery efforts. In this case, the market is likely to maintain a bearish trend until investor sentiment changes positively.

SOL price faces many obstacles

Currently, the price of SOL is trading around 130 USD, struggling to break through the important resistance level of 135 USD. Although there have been signs of short-term recovery, the likelihood of SOL successfully breaking this resistance remains low. This indicates that the price of SOL may continue to fluctuate within a narrow range in the near future.

The combination of weak demand and negative market sentiment is increasing the risk of a price decline. If the support level of the upward trend is lost, Solana could continue to drop to the next important support levels at 125 USD and even 118 USD.

This scenario will prolong the downtrend and push SOL into a deeper state of weakness.

SOL price analysis | Source: TradingviewHowever, if SOL can successfully break through the resistance level of 135 USD, the price of this altcoin could aim for 148 USD. A sustainable increase above this level could push SOL up to 150 USD, thereby invalidating the current bearish outlook.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions.

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Mr. Teacher

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