Solana price historically sells off by 50% when this network indicator doubles, could it happen again?
- Solana price is auctioning within a consolidative range, likely to resolve with an explosive move.
- The SOL network shows an uptick in development activity, which has previously played a role in price fluctuations.
- A break on either side of the coiling zone will result in a 15% swing.
Solana price is preparing for its next surge as price consolidates since November. Based on recent months, the SOL price leans more bearish. Still, the current range can squeeze out more gains. Key levels have been defined to assess a bullish and bearish scenario.
Solana price setting up shop
Solana price has endured ping-pong price action since the middle of November. On December 12, the centralized smart-contract token is bound to a range that has compressed from a 15% spread down to just 6% within three weeks. On smaller time frames, the congestion has day traders making hasty bets against one another while dually fighting for position with algorithmic trading bots.
Solana’s price is currently trading at $13.12. On-chain metrics display the algo traders’ interest in SOL despite the waning liquidity. According to Santment’s Development Activity indicator, the Solana network witnessed a 100% increase in development in the last three weeks. The metric calculates updates on Solana’s GitHub Repository. GitHub is a medium for programmers, often algorithmic traders, to collaborate and share codes. The repository rose to 78 billion on September 6 from 35 billion on November 28.
Historically, Solana’s Development Activity indicator has been rather timely, with sudden market selloffs correlated to influxes in development. On more than one occasion since September 2021, when the indicator doubled relative to its previous swing, the Solana price would sell off by more than 50%. These selloffs can be spotted on December 18, 2021, April 2, 2022, and August 24, 2022.
From a technical standpoint, the Solana price consolidation could lead to a 15% swing in either direction. The projection is based on classical price action techniques utilizing the largest spread within the current range. A break above the recent swing high at $14.43 could prompt a rally into the mid-$16 zone. On the contrary, a breach below the recent swing low at $12.82 could be the catalyst of a 15% decline toward the yearly low at $10.94.