Thomas Daniels
Solana (SOL) Eyes $120 Correction, But On‑Chain Fundamentals Signal Long‑Term Strength
Solana (SOL) is currently signaling a potential drop to the $120 level, driven by a classic head‑and‑shoulders formation on the daily chart. However, while technical indicators suggest bearish momentum, underlying on‑chain data reveals enduring investor confidence and robust network activity—factors that could support a long‑term rebound.
As of writing, SOL trades around $137.30, with a bearish engulfing pattern pointing toward potential downside. A confirmed breakdown below the critical $140 neckline—especially on heightened volume—could accelerate the move toward a downside target of approximately $126. Analysts also highlight a broader demand zone between $95 and $120, underpinned by institutional order flow, which could act as a pivot for price recovery.
To invalidate this bearish thesis, SOL must register a daily close above the $157 resistance level. Until then, the risk remains tilted to the downside. Adding to the pressure is Solana’s historical price correlation with Bitcoin; if BTC revisits support around $100,000, SOL may face additional sell‑side momentum.
On‑Chain Metrics Paint a Different Picture
Despite short‑term volatility, Solana’s on‑chain indicators remain firmly bullish. According to Glassnode, Solana’s Network Value to Transactions (NVT) ratio has dropped below 10—the lowest since February 2025. This metric, which compares market capitalization to transaction volume, suggests growing utility and strong user activity on the network.
In parallel, exchange data reveals ongoing accumulation. On May 28, net exchange outflows peaked at 4.6 million SOL, underscoring long‑term holding behavior among investors. Although recent inflows have emerged amid the price dip, the broader trend points to increased confidence in Solana’s value proposition.
Conclusion
While technical indicators favor a potential retest of the $120 level, Solana’s long‑term prospects remain supported by healthy network metrics and continued investor accumulation. The current dip may, therefore, offer strategic buying opportunities for long‑term holders, particularly if macro crypto sentiment stabilizes.
