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The Cryptocurrency market is experiencing a strong correction led by BTC, which returned to $95,000, losing 5.8% of its value in the last 24 hours.
Meanwhile, SOL lost the key $200 level and fell 6.25% in the last 24 hours and is currently trading at $195.7.
In general, the top 100 of the largest crypto assets is in the red and the total capitalization of the crypto market presents losses of up to 4.17% in the last 24 hours.
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What is behind the current decline of SOL and the crypto market in general?
The first factor driving the decline is the US Federal Reserve (Fed), which on Wednesday, December 18, signaled its intentions to adopt a dovish stance regarding future interest rate cuts.
It should be noted that one of the main bullish factors for SOL and the other cryptocurrencies, beyond Trump’s victory, was the start of interest rate cuts by the Federal Reserve in recent months.
However, despite having implemented its third consecutive rate cut on December 18, Fed signaled 2025 rate cuts will be smaller than previously expected. This position generated uncertainty and concern among investors.
Specifically, FOMC members only envision two interest rate cuts by 2025, well below what was projected in September. Therefore, despite the 25-point interest rate cut, the market was filled with pessimism and uncertainty.
In fact, if we focus exclusively on Solana’s project, we do not find compelling, truly bearish reasons. Even The Solana network reached a record number by reaching 66.9 million daily transactions on December 17 (according to Artemis).
On that date, the number of transactions on the Solana network exceeded that of other large Blockchains combined such as Ethereum, Base and TRON.
For this reason and in this context, it is good to let the charts reveal the behavior of SOL’s price and what may happen next.
SOL Chart Analysis: What are the key levels to watch?
On the SOL chart, the first thing that stands out is that the price of the token presents a 28% correction from its all-time high at $264 (reached on Friday, November 22) to current levels.
Now the price is trading in a bearish channel (purple line) that has been broken downwards, which signals an accentuation of the bearish trend. Therefore, it is worth establishing key support levels.
Firstly, the support at $186, a loss below that level could take the price as low as $162. A fall below such support could take SOL towards the next solid bottom of $154.
The token is trading below the 20, 50, 100 and 200 EMAs, a sign of the strong reversal. The downward crossing of the 20 and 50 EMA to the 200 EMA preceded the accentuation of the fall.
Resistance levels to take into account
In the face of a recovery we must take into account the following resistances, which can serve as a signal that the price will recover.
The first line to watch is 200 USD, this is an important psychological level. In the face of a recovery, the price needs to establish itself above this line before experiencing an increase.
The next resistance level is $221, which is in line with the 200 EMA and whose surpassing would lead the price to break upwards to the upper level of the bearish channel that we mentioned at the beginning.
Subsequently, SOL would encounter a double top at the $247 level, the break of which could take the price back to all-time highs.
The Relative Strength Index at 34 shows that the price of SOL is close to oversold, so in the short term rebounds are feasible from present levels.
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