Long-term Solana holders are quietly buying in as prices drop – Will the price recover?

Solana has struggled to maintain its upward momentum since it rose to a cycle high of $206 on July 22. In just the past week, the asset has fallen by 14%, reflecting a decline in confidence among short term investors. However, on-chain data suggests that this currency may witness a recovery in the short term, with initial signs indicating that a shift in sentiment could drive the recovery in the upcoming trading sessions. Long term holders are doubling the amount of investment into Solana. While short term traders are selling off, long term holders (LTH) are returning to an accumulation state. This change in behavior is clearly reflected in the Liveliness index of Solana, which has been steadily falling since July 25. According to Glassnode, this index, which tracks the movement of previously inactive tokens, has fallen to a weekly low of 0.76 yesterday, confirming a decline in the sell-off activity of SOL LTHs.

The Liveliness index tracks the volatility of long-held tokens by calculating the ratio of the number of days coins are destroyed compared to the total number of days coins are accumulated. When this index rises, it indicates that many inactive tokens are being moved or sold, often signaling profit-taking by long-term holders (LTH). Conversely, similar to SOL, when this index falls, it indicates that these investors are moving their assets off the exchange and choosing to hold. Moreover, since July 30, the Net Position Change of SOL has recorded a steady rise. This confirms that an increasing number of coins are being transferred to long-term storage, despite the lackluster price movement of this asset.

Data from Glassnode shows that this index, measuring the 30-day change in supply held by LTHs, has risen by 102% in the past four days. When this index rises like this, it indicates that LTHs are accumulating more coins than selling them. Solana Traders Are Selling at a Loss — Has the Final Bottom Formed? The actual Profit/Loss ratio of SOL continues to fall, reinforcing the above bullish outlook. On-chain data shows that this index closed at a 30-day low of 0.15 on August 2, indicating that many traders who exited their positions are still incurring losses.

Traditionally, the market tends to stabilize when most participants sell below the cost price. With the number of holders willing to sell their tokens at a smaller loss, selling pressure may decrease, paving the way for SOL to find a local bottom before any bullish catalysts that could trigger a recovery. Solana Hangs in the Balance—Support at $158 Faces Serious Challenge SOL is trading at $160.55 at the time of writing, holding above the important support level of $158.80. If buying pressure rises, SOL could start to reverse and aim for $176.33.

However, if the sell-off continues and the support level weakens, the price of SOL could fall to $145.90.