Following an incredible start in January, the SOL token appears to have stopped its upward momentum, at least for now.
Solana was among some of the most profitable currencies in 2023, picking up a whopping 165% in value. The asset started the year trading at around $9.92, reaching $26,04 this Sunday, January 29.
However, on this Monday, the asset went through a significant retraction. The SOL token dropped from $24,55 to $23,92 throughout the day, losing 4.78% in the last 24 hours.
SOL faced a strong rejection by the bears after reaching the $26.00 resistance.
Historically, the $26.00 zone has proven to be one of the most important zones for the token. Since reaching that level on April 7, 2021 – Solana saw in that price action zone an important support that served as the currency’s bottom during the incredible upward trend it would face in the upcoming months.
Now, the market is using that zone as a resistance level, meaning that buying pressure faces a stronger rejection when SOL reaches that zone.
On January 14, CCO reported that following such a fast-paced growth could lead Solana into an “exhaustion period”, meaning that the currency could enter an “overbought” zone.
Overbought refers to a situation in the financial markets where an asset, such as a stock, commodity, or cryptocurrency, has risen significantly in price and is trading at high levels relative to its recent price history.
This situation is often associated with a buying frenzy, which can cause the price of the asset to become inflated and unsustainable.
Things Could Take a Turn For The Better After FOMC Meeting
Despite the overbought presumption, Solana is still not far off from its recent high. On top of that, in the case that this week’s FOMC meeting results in a favorable playing field for riskier assets, Solana could very quickly pick up even more gains in 2023.
Right after becoming one of the fastest-growing assets in mainstream crypto, Solana was on the very opposite end of the scale.
Following the FTX collapse, SOL quickly entered the ranking of the biggest losers of 2022’s fourth quarter. While assets like bitcoin and Ethereum already came close to recovering the losses after Sam Bankman-Fried’s exchange tanked the market, Solana is still far off the $35,00 margin it had before the crash.
This, if anything, means that the asset still has a lot of room for growth, so a favorable decision by the Federal Reserve could quickly put the blockchain back on the upward trend track.