The crypto market has rebounded as weekend volatility pushed the prices up. Solana (SOL) price bounced with a strong 10% gain before resuming the downtrend. While it was still holding the critical $130 support level, SOL price is still at risk of further downside. In this article, we analyze three reasons why you should not buy SOL just yet.
Solana Price Recovers But Here’s Why You Should Not Buy SOL Yet
The sell-off that affected cryptocurrency prices for most of this week has died down, and Solana and most altcoins have posted a slight recovery. However, at press time, SOL was already wiping off these gains with a 3% drop in 24 hours to trade at $140.
As bears regain their control over the market, here are the three reasons why you should not buy SOL.
Solana Price Enters Distribution Phase
Solana price seems prime for another downtrend as the Power of Three (PO3) setup shows that it is in a distribution phase. During this phase, large traders rapidly sell Solana, forcing the price down.
Solana completed the accumulation phase in 2024 when these large players were increasing their positions. It recently completed the manipulation phase, and distribution is now in play.
As large traders start to exit the market, SOL price will likely drop to collect liquidity at $112. If the downtrend extends and Solana breaches the “make and break” support level of $77, it could drop to $30.
SOL/USDT: 1-day Chart
Solana Death Cross Looms
A death cross is also looming on Solana’s daily chart. The 50-day Simple Moving Average (SMA) is tipping south and nearing a bearish crossover with the 200-day SMA.
If the 50-day SMA crosses below the longer-term SMA, it could trigger a sharp bearish move for Solana price, making a drop to $112 likely to happen in the near term.
Besides the death cross, SOL continues to trade below its 200-day SMA of $200. As long as SOL continues oscillating below this level, it strengthens the bearish Solana price forecast, making it one of the top reasons to sell.
Whales Dump SOL as $1.8B FTX Unlock Looms
Solana whales have been dumping SOL, adding to the bearish pressure affecting the price. As Coingape reported, large addresses have unstaked nearly $1 billion worth of SOL and deposited $516M SOL to Coinbase Prime.
These whale moves come amid anxiety about what the upcoming unlock of 11.6M SOL from the FTX bankruptcy auction would mean for price. The asset managers that bought these tokens from the FTX bankruptcy estate will unlock 11.6M SOL on March 1, which may ruin its chances of recovery.
Bottom Line
Solana price is in a distribution phase where large players selling SOL could trigger a crash below the “make or break” support level of $77. A looming death cross on the daily chart, whales selling, and a possible selloff of 11.6M SOL tokens make this not the right time to buy Solana despite the recent drop.
The post Solana Price Bounces 10% – 3 Reasons Why You Shouldn’t Buy SOL Yet appeared first on CoinGape.
