Solana Price Hits Extreme Oversold Levels After 40% Crash, Will SOL Recover?

Solana price is down by 40% over the past month, with the crash causing panic selling that has pushed SOL to extremely oversold levels. Traders are selling Solana at the same pace they did during the FTX collapse in 2022, raising speculation over whether the altcoin faces further downside or a price recovery lies ahead. Let’s explore what this oversold situation means for SOL price. 

Solana price today trades at $141 with a marginal increase of 1%. SOL is experiencing volatile swings with the price fluctuating between $130 and $142 in 24 hours. 

Solana Price Hits Extreme Oversold Levels After Crashing 40%

The intense selling pressure caused by bearish trends across the broader crypto market has pushed Solana into extremely oversold territory. According to analyst Gnarleyquinn, Solana’s Relative Strength Index (RSI) has dropped to levels usually seen during capitulation events. 

After the recent drop in Solana price, the RSI has tanked 40% to levels previously seen when the FTX exchange filed for bankruptcy. SOL also witnessed two other capitulation events in 2023 that forced the RSI to drop to these extreme levels. 

Solana RSI

Usually, whenever the RSI drops to these record lows, it may precede a reversal to the upside. Analyst Raoul Pal outlined this potential rebound by pointing out that Solana price has breached the lower boundary of the logarithmic regression channel. 

This drop suggests the likelihood of a reversal. Looking at the past trends, whenever SOL reaches this level, it bounces back to the center of the midline, suggesting that a mean reversion is likely to happen. 

Solana Log Regression Channel

If sellers are exhausted and buyers step in now to buy SOL at the current price, it may precede a bullish Solana price forecast. But how far can SOL rally? 

What’s Next For SOL – Recovery or Crash?

Solana price has dropped to the lowest level since October 2024, as SOL bears take control. The price has also been consistently making lower lows, suggesting that the downward momentum is growing stronger. 

SOL has formed support at $134 and it is successfully defending this price level. If the downtrend continues and the extreme crowd bearishness pushes SOL below this support, a drop to $120 remains likely. 

Technical indicators also show that despite oversold conditions, SOL may be poised for another downtrend. The Average Directional Index is rising, suggesting the current downtrend is strong. The red Awesome Oscillator bars are also increasing in their length, indicating that the bearish momentum is accelerating. 

For the trend to reverse to the upside, SOL needs to flip resistance at $177, which will set the stage for a rally past $200.

SOL/USDT: 1-day Chart

Because of this bearish outlook, SOL price may not be poised for a recovery in the near term. A bullish reversal will only happen if greed replaces the current sentiment of fear in the market. 

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