Solana [SOL] Favored on the charts, but is it too good to last

Solana’s blockchain may now be used to accidents that seem to happen every once in a while. This week, reports emerged that the SOL address had been hacked. However, investigations revealed that the breach was external, not the network’s fault. Fortunately, the event did not seriously affect the price action of SOL.

Now, while recent events have not sparked panic selling, SOL still sees some downside. The price of the altcoin is down about 16% from its late-July levels. This pullback appears to be in line with the performance of the cryptocurrency market over the same period.

some breathing room for the bulls

SOL managed to record a 7% gain over the past two days, confirming that it can still manage healthy demand. The upside came after its price action nearly touched its ascending support line.

Source: TradingView

Despite the recent gains, SOL investors should proceed with caution. The latest rally has been characterized by low buying volume, which explains the limited upside. On top of that, the recent downward pressure earlier this week pushed it below the 50% RSI level. This highlights the weakness of the rising price channel since the bottom of the SOL.

Interestingly, SOL also showed resilience against the downside. Its latest rise marks the second time it has corrected without a major interaction with the support line. Investors may take this as a bullish sign.

This could explain why market sentiment has favored the bulls over the past two days. Sentiment changes were observed in Binance funding rates and DyDx exchange funding rates.

Source: Santiment

Solana developers have been very active over the past two weeks, as the development activity metrics show. This could be another reason for the slight improvement in investor confidence.

However, nothing attracts investors more than a healthy network, one with strong activity and organic demand.

Source: Santiment

Solana saw strong growth in NFT volumes in July. Although these volumes dropped significantly after mid-month, they remained at healthy levels.

in conclusion

Although Solana bulls are currently in control, sooner or later the price will give up the current channel. That would amount to a reshuffle, meaning the short-term outlook remains a toss up.

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