Solana, one of the top altcoins, trailing Ethereum and the BNB Chain, has not been spared in the recent correction. After rallying to as high as $210 in Q1 2024, the coin is now sliding, facing strong headwinds, plunging, and following the performance posted by Bitcoin and Ethereum.
Is This The Best Time To Buy Solana?
Even amid this deep retracement, Raol Pal, a macro analyst, thinks this is the best time for investors and traders to consider Solana. In a post on X, Pal said traders may look at loading the coin, citing the candlestick arrangement in the daily chart.
Looking at the SOLUSDT chart, it is clear that the coin is moving sideways and inside a broader flag after the spike to over $200 in March. However, what’s emerging amid the cool-off is that the zone between $120 and $125 is a support to watch out for.
At press time, SOL is changing hands at around $130, down approximately 40% from the March 2024 highs. If bears of late May 2024 press on, it will be interesting to see how prices will react at this level.
From Pal’s position, the analyst expects prices to bounce back from this level and resume the uptrend from last year. The problem is that there won’t be any guarantee that prices will shoot higher from this support zone.
Technically, a close above $190 and preferably $190, could mark the resumption of the next leg up, quashing bears.
On-Chain Activity Shrinking As Ethereum Set For More Institutional Support
Whether this will pan out in the coming weeks or months is unclear. How SOL performs is primarily tied to market developments and on-chain activity, among other factors.
Although Solana is fast emerging as a preferred choice for meme coin issuers, there has been a marked drop in on-chain activity in recent days. Notably, Ethereum layer-2 solutions like Base, Arbitrum, and Optimism appear to be taking over.
Solana offers higher scalability than Ethereum, meaning transaction fees are low. When on-chain activity drops relative to other cheaper platforms, it could mean the demand for SOL is falling, which is a net negative for prices.
At the same time, the revival in the stock market, which has seen indices like the S&P 500 rally, could draw investors’ attention to cryptocurrencies. Additionally, with the United States Securities and Exchange Commission (SEC) on the brink of approving a spot Ethereum exchange-traded funds (ETF), more capital will flow to ETH.