Layer-1 Coin Solana has risen nearly 10% over the past week. The recent surge in Bitcoin has helped lift the wider market, dragging Sol and other altcoins higher.
However, a closer evaluation of SOL performance suggests that there is no strong support for the rally and could soon face a reversal.
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Solana prices are at risk: data suggests trouble
Sol’s Rally faces the threat of decline as its Chaikin Money Flow (CMF) tends downwards, forming a bearish divergence. At the time of writing, the momentum indicator is placed under the zero line of -0.06, and the trend continues to decline.
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The CMF indicator measures how an asset enters and leaves the asset. Returning a negative value while the asset price is rising will form a bearish divergence and indicate weak liquidity.
This pattern suggests that despite Sol Buyers still keeping prices high, capital inflows into assets are declining, potentially causing a reversal in the short term.
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Furthermore, the number of new addresses involved daily on the Solana Network has decreased, indicating a decline in activity and a decline in demand. With each GlassNode, the daily number of new wallet addresses in Solana has plummeted 15% since September 18th.
The decline in daily active addresses reflects a slower network participation, which could be a warning sign of the underlying demand for assets.
This could lead to a lower SOL purchase pressure, reducing the chances of sustained upward price movements.
Weak Demand Cloud Solanar Rally
Sol’s Rally over the past week has placed prices on a rising parallel channel, and generally shows a bullish trend. However, due to the loss of underlying demand, the token price could fall below this pattern, reaching $205.02.
Conversely, if Altcoin maintains the gathering, its price could reach $253.66.
