Solana appears to be poised to close in red this month, unlike her historically positive September performance for the fourth year in a row.
With key on-chain metrics pointing to slower network activity, a wider dip in market sentiment could lower Sol’s price as the month ends.
SOL network activity will decline and market sentiment will become negative
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Over the past four years, September has consistently provided SOL profits. In 2021, Sol surged 29%, with a more modest but steady increase in 2022 by 5.38%. The momentum has been strengthened in 2023.
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But this year looks different. Sol appears poised to close down September low, defeating his winning streak.
Despite launching the month strongly, Sol peaked at $253.51 on September 18th, but then fell by about 17%, reflecting a growing bear pressure.
This decline is partly due to declining bullish sentiment in the market, primarily due to weakening user engagement on the Solana network.
According to Artemis, the total number of daily active addresses interacting with Solana-based protocols totalling 304 million, a 25% drop.
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Daily Active Address represents the number of unique wallets that actively send, receive, or interact with on-chain applications. If it falls, it shows weaker user engagement and lower network activity, which can reduce the overall demand for the coin.
On the technical side, Sol’s sharp relative strength index (RSI) on the daily chart confirms a decline in demand. At press, this momentum indicator is 40.54.
RSI measures the asset over-selling conditions, with measurements above 70 suggesting over-buying conditions and exhibiting conditions below 30.
At 40.54, Sol’s RSI is in bearish territory, indicating that sales pressure is outweighing the buying momentum. The surrender stage may not be imminent, but if bearish feelings continue, downward momentum can last.
Sol settled down due to the red closure in September
If the downward trend continues, Sol could close September, which is below its recent high. In this scenario, its price could drop to $195.55. If this support is not retained, the coin’s price could drop to an additional $171.88.
However, a sudden spike in network activity or a broader reversal of market sentiment can reduce losses and stabilize prices. With such a catalyst, the sol could gather towards $219.21.
