Over the past weeks, Solana's native token, SOL, has been under selling pressure, struggling to hold above crucial resistance levels. As of heading into the last trading session, SOL was down 3% and trading around $141. The selloff leads to fears of whether the $140 support level can hold against several market headwinds.
One of the major reasons for the recent plunge in SOL prices is the declining activity in DApps on the Solana network. This can be measured from the fact that currently, volumes on all the popular DApps have shrunk. For instance, the volume of pump.fun is down 44% over the past week and now amounts to $133.5 million.
This has also been in parallel to a general decreased user engagement throughout the sectors on Solana, from DeFi to NFT marketplaces to gaming.
Fading interest in meme coins, which greatly contributed to the SOL demand at an earlier time, compounds this problem even further. Recent meme coin price corrections, most notably tokens like BONK and WIF, have led to a tapering in the levels of trading, thus putting more pressure on SOL prices.
The other factor further weighing in on the price of SOL is whether the United States will approve a Solana spot exchange-traded fund. After preliminary excitement that pushed the price of SOL above $185 at the end of July, the U.S. Securities and Exchange Commission has shown some reluctance to approve such products.
Further dampening investor sentiment is the recent decision to withdraw 19b-4 filings by the Chicago Board Options Exchange (CBOE) for Solana spot ETFs from asset managers VanEck and 21Shares; again, in stark contrast with Brazil, where the country's Comissão de Valores Mobiliários (CVM) recently approved its second Solana spot ETF.
While this approval would give some kind of underlying support to the price of SOL at the Brazilian market, it still puts many skeptical investors on the side as long as no similar product has been approved on the U.S. market.
From a technical perspective, SOL has been trading in a relatively tight range, with fluctuations between $140 and $150. The level of $150 is acting as a resistance for SOL. The stock has tried to cross this boundary several times and failed. This is already driving SOL close to the test of the critical $140 support level, which could provide direction for the token in the near term.
If SOL breaks on this support area of $140, then testing further down from this level is around $130. Conversely, if prices bounce from $140, then SOL can retest the $150 resistance point, although bulls will have eyes set on breaking out north of $160 and $170 in the best-case scenario.
Moreover, the Relative Strength Index (RSI) is moving below its signal line with a rating of 45. This trend suggests that the bears have the upper hand and may breach the $140 support level. Should the RSI fall into the oversold region, this support level may be tested. In addition, the Chaikin Money Flow (CMF) trend south, with a rating of 0.03, suggests that money is flowing out of the market, which is a bearish shift.