Why the 15% collapse of Solana could create a potential bullish trend

Solana has fallen sharply in the past week, losing 15% amid a weakening overall market affecting most major altcoins. The Layer-1 project is currently trading around $160, down from last week's high of nearly $180.

Although the adjustment reflects weakness across the crypto market, on-chain data suggests that this downturn may soon be over.

Long-term Solana holders show confidence as the market cools down

The activity level of Solana has fallen significantly in recent days, indicating that long-term holder (LTH) sees the recent price drop as a strategic buying opportunity. According to Glassnode, the current index is at 0.76, the lowest in the past 14 days.

! Solana Buzz | Source: GlassnodeVolatility measures the ratio between the coin days destroyed (CDD) indicator of an asset class to the total coin days accumulated (CDA) to track LTH performance. When it rises, this indicates an increase in the amount of inactive assets being moved or sold, signaling that long-term holders are taking profits.

On the other hand, the activity is falling as inactive wallets begin to accumulate. This trend indicates that LTH of SOL are moving assets off the exchange, a sign of bullish accumulation.

Moreover, the Funding rate of SOL has shifted to positive and is currently at 0.0041%. This indicates an interest in Long positions from SOL traders in the futures market.

Funding rate of Solana | Source: CoinglassFunding rate is a periodic fee paid between traders participating in Long or Short on perpetual futures contracts to keep the contract price aligned with the spot price. When at a positive level, Long traders will pay the Short side, indicating that bullish sentiment is prevailing and many traders expect the price to rise.

SOL could soar to $195 if it holds the support level

The price of SOL could recover to the level of $171.88 if LTH continues to accumulate strongly and the general market conditions stabilize. If successful in flipping this price range to support, it could push the altcoin towards $195.55.

Solana Price Analysis | Source: TradingViewHowever, sellers could pull SOL back to $142.59 if the fall is stronger.

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