Solana’s Price Struggles within Descending Channel
Solana’s price has been experiencing a downward trend within a descending channel that has been forming since mid-July. Despite encountering resistance at $28, which prevented gains above the desired $30 level, the token managed to hold onto support at $17.5. However, the recovery has been challenging due to seller congestion at $20, coinciding with the upper boundary of the descending channel. As a result, SOL is down nearly 3% on Wednesday, currently trading at $18.97. If bullish momentum doesn’t emerge soon, the price may test the lower boundary support around $17.
Bearish Sentiment and Moving Averages
Solana’s price is currently positioned below three key moving averages on the daily chart, namely the 50-day Exponential Moving Average (EMA) at $20.23, the 100-day EMA at $20.74, and the 200-day EMA at $21.76. This bearish setup hampers recovery attempts and dampens sentiment among traders. Despite a buy signal from the Moving Average Convergence Divergence (MACD) indicator in mid-September, resistance at $20 and the presence of the moving averages have hindered any bullish outlook.
Solana’s DeFi Strategy and Challenges
Solana acknowledges the challenges it faces in the competitive decentralized finance (DeFi) sector and has introduced a new strategy to regain its position and attract more users. The strategy includes implementing points programs on various protocols within the ecosystem, such as Cypher, MarginFi, Jito, and entrant, to incentivize user contributions and encourage participation in the Solana DeFi ecosystem.
Additionally, Solana is striving to improve the Total Value Locked (TVL) in its ecosystem, which has recently increased from $296 million to $312 million. However, the protocol is still grappling with a significant decline in decentralized exchange (DEX) volumes, which are crucial for the vitality of the DeFi protocol and Solana’s prospects in the sector.