Solana (SOL) Approaches Critical Technical Junction

Solana (SOL) is nearing a significant technical juncture as it approaches the formation of a death cross, a pattern often associated with potential bearish momentum.

What is a Death Cross?

A death cross occurs when the 50-day simple moving average (SMA) of an asset’s market price falls below the 200-day SMA. Currently, Solana’s 50-day SMA is $188.71 and is trending downward, indicating a potential crossover with the 200-day SMA at $184.03 in the coming days.

The imminent crossover suggests that the short-term momentum, represented by the 50-day SMA, is underperforming the long-term average, which is significant given the negative sentiment in the cryptocurrency market.

Market Context

Cryptocurrency prices continued to decline on Monday, prompted by reduced expectations for additional Federal Reserve rate cuts, triggering a sell-off in the markets. Risk assets like cryptocurrencies faced increased pressure, and U.S. equities also declined as investors sought safety.

Potential Scenarios Ahead

Solana is positioned to mark its fifth consecutive day of declines since March 6, hitting $120.35 in Monday’s session, the lowest level since September 2024. At the time of writing, SOL has dropped 5.11% in the last hour, 9.11% over the last 24 hours, and 23.10% weekly.

The previous death cross for Solana occurred in September 2024, resulting in a price bottom before it began an uptrend, reaching as high as $264 after experiencing a golden cross in the following months.

Another potential scenario involves SOL declining further, with key support levels identified at $109 and $88. Should Solana maintain its position above these critical support levels, it may attract buyers looking for value, leading to a price rebound.

Conversely, if the SOL price confirms a bottom, it may engage in consolidation before its next significant move.