Three reasons Solana could see a double-digit decline

• Solana Network saw a decrease in the number of active addresses and new addresses in September.
• Open interest in Solana fell nearly 20% between September 30 and October 4, suggesting capital is likely exiting SOL.
• Technical indicators show the likelihood of a correction in SOL when analyzing price action over different time frames.
• SOL could wipe out nearly 15% of its value if it reaches support at $120.

The price of Solana (SOL) appears to have found some support on Friday, recovering slightly from the strong sell-off earlier this week. However, chain metrics and technical indicators are showing increasing chances of further price declines, suggesting that the rally could be short-lived.

These three factors signal that Solana could undergo a double-digit correction

Address activity on the Solana blockchain decreased during September, both in terms of active and new addresses, according to data from The Block. While address activity remains well above its average levels since 2024, the recent decline suggests declining demand among market participants.

The number of new addresses in the Solana network

The number of active addresses in the Solana network

The second key factor is open interest (OI). The value identifies the total number of active contracts in the options market that are currently “open” or awaiting expiration. Traders use the indicator to gauge interest and demand for an asset among market participants.

Solana’s OI fell nearly 20% between September 30 and October 4, according to Coinglass data.

Solana Open Interest

The third factor is the technical indicators on the Solana price charts in different time frames.

Solana could suffer a decline of almost 15%.

Solana is up around $140 on Friday. The altcoin is down 12% this week, and technically another double-digit decline is likely.

The MACD (Moving Average Convergence Divergence) indicator on two different time frames (daily and 4-hour) shows the underlying negative momentum in the SOL price trend.

On the daily chart, Solana has traded in a tight range between $163 and $120 since August, and an outlier is the asset’s drop to a low of $110 on August 5.

SOL is currently near $140, near the midpoint of the range. If SOL corrects further, the altcoin could drop to the $120 low (nearly 15% decline) or sweep the liquidity to the August 5 low of $110.

SOL/USDT Daily Chart

If Solana sees a daily candlestick close above Monday’s open at $158, the bearish thesis would be invalidated and the altcoin could start to rally towards the psychologically important $160 level.

On the 4-hour SOL/USDT chart, Solana price is maintaining the medium-term uptrend and could find support in the fair value gap (FVG) between $134.45 and $137.60 if there is a correction.

On the other hand, if SOL closes above the 200-day EMA at $144.76, it could invalidate the bearish thesis and then rise towards the resistance zone between $149.99 and $155.93, a zone of imbalance on the 4-hour chart.

SOL/USDT 4-hour chart

Solana could sweep liquidity to $120, the lower end of the range the asset has traded in for nearly two months before correcting or starting a recovery.