Solana Price News: SOL Tags Key Support and Could Deliver 90% Gain If It Bounces

Despite the setback, SOL has trimmed its year-to-date losses from around 40% to just 15% while its direct rival Ethereum has seen the price of its utility token, ETH, drop by a higher magnitude of 27%.

The launch of Ethereum’s Pectra upgrade could be a threat to Solana if the former manages to capitalize on the latest wave of positive momentum it has been seeing to attract developers and crypto investors to its platform once again.

Solana has been the home of meme coins to this day. Platforms like Pump.fun have thrived in this blockchain amid its low transaction costs and robust scalability.

However, if Ethereum’s latest improvements narrow down the gap between the two blockchains, it could lead to a migration of some of these assets as the EVM offers higher liquidity and the ecosystem is more than 7 times larger than that of Solana.

SOL Hits 200-Day EMA – What Happens Next?

Trading volumes in the past 24 hours have surged by 132% for SOL as the token retreats a 5.3%.

This indicates that the current price level is relevant to market participants. The American session opened with some manipulation as prices climbed right after the opening, possibly to flush out short sellers who have been positioning for further drops.

Today’s session is quite relevant as the price is tagging the 200-day exponential moving average (EMA).

This was the key support to watch we highlighted in our latest Solana price prediction as a break below could signal weakness.

A bullish crossover between the 21-day EMA and the 200-day EMA – a buy signal known as a ‘golden cross’ – seems poised to occur despite today’s bearish price action.

The last time this buy signal hit, the price rose by 90% in just two months. However, the market did pull some tricks just a few days after this bullish crossover as we can see that the price broke below the 200-day EMA twice.

Don’t Fall For Bear Traps

This is known as a bear trap and it is typically a strong indication of market manipulation in the form of a liquidity grab. Deep-pocketed traders use this strategy to first flush out tight long positions whose stop loss is right below a key indicator like the 200-day EMA.

As bears see the price dropping below this key indicator, new short positions are opened and, once again, the market uses this to its advantage and pumps up the price to trigger the stop-loss orders from these shorts to raise the liquidity needed to keep the rally going.

Surviving these periods of manipulation is not easy and they don’t necessarily happen every time a bullish crossover occurs. With this in mind, investors should wait for a break below the 200-day EMA if it occurs and see how the price action behaves in the next few days.

If the price bounces and rises above this indicator again, it is a sign of a bear trap and it would support a bullish outlook for SOL.

In any case, with or without bear trap, if the price rises and keeps rallying after this golden cross, history indicates that it could deliver some strong gains for SOL investors so this is a good time to keep an eye in the price action and determine the best entry not to miss out on what a potential climb toward the $300 area for this token.