Solana [SOL] Overvalued? Market Indicators & On-Chain Metrics Point to Bearish Trend
• Solana’s [SOL] indicators suggest the arrival of market bears due to its high Market Capitalization/TVL ratio.
• Despite this, SOL’s demand across the derivatives market has increased and it is currently trading at $25.55 with a market capitalization of more than $9.4 billion.
• However, Solana’s recent price action and on-chain metrics indicate that the bears might gain an advantage in the market, leading to a trend reversal.
Overview
Solana [SOL] has recently been identified as the most overvalued blockchain by TK Ventures and CoinWire based on its Market Capitalization/TVL metric, indicating an increase in selling pressure for SOL tokens. Despite this, SOL’s demand across the derivatives market has increased and it is currently trading at $25.55 with a market capitalization of more than $9.4 billion .However, Solana’s recent price action and on-chain metrics indicate that the bears might gain an advantage in the market, leading to a trend reversal.
Price Action
According to CoinMarketCap, SOL registered daily gains of over 6%. At the time of writing, it was trading at $25.55 with a market capitalization of more than $9.4 billion. Additionally, Solana’s Relative Strength Index (RSI) registered a slight downtick near the overbought zone while Money Flow Index (MFI) went close to the neutral zone – A bearish finding. Moreover, MACD revealed that bulls were in battle with bears which implies that bears may gain an advantage soon enough resulting in a trend reversal for SOL tokens prices..
NFT Ecosystem
CryptoSlam’s data revealed that Solana’s total sales value in the last seven days was 27.52 million which is 27% lower than what was recorded for previous week despite total number of transactions increasing last week . This indicates declining positive sentiments around SOL token from investors‘ perspective .
On-Chain Metrics
SOL token’s 4-week price volatility declined sharply raising concerns about possible downward pressure on prices . Furthermore , despite increase in demand for SOL token across derivatives markets there still remains lack of trust from investors regarding long term performance .
Conclusion
With all these indicators combined , there seems to be strong possibility if not certainty that bear forces will take control and result in downward trend reversing current upward momentum for SOL tokens prices .