As per recent data, the cryptocurrency Solana is currently hovering around its Realized Price, a key indicator that has often been the turning point for significant trend reversals.
In a recent analysis by CryptoVizArt.₿, a senior analyst at Glassnode, there’s a deep dive into Solana’s Realized Price. This metric essentially tracks the average cost basis of an investor or address within a specific cryptocurrency network.
If the Realized Price is below the spot price of the asset, it indicates that the bulk of holders are likely in a profitable state. Conversely, if the Realized Price is higher than the coin’s value, it hints at a net loss across the market.
CryptoVizArt.₿ shared a graph that effectively illustrates the fluctuations in Solana’s Realized Price over recent years:
The graph reveals that Solana’s trading value has been higher than its Realized Price for the past year, thus implying that the average holder has been reaping profits. However, a recent market crash has impacted the entire digital asset landscape, including SOL, leading to a retraction of the coin’s price to its Realized Price. This suggests that holders are now hovering around their break-even point.
The Realized Price has always been a crucial point for cryptocurrencies, as investor reactions are often significantly influenced by movements related to their cost basis.
During bullish trends, the Realized Price can serve as a support level, fueling investors to buy during ‘dips.’ If this level is compromised, it indicates that holders have ceased accumulating at their break-even point. Looking at the historical data, the last time such a breakdown occurred was in 2022.
Back then, Solana managed to maintain above the Realized Price for about five months before eventually succumbing to a bear market. It was only in the final quarter of 2023 that the coin managed to bounce back above this critical line.
This time around, with Solana retesting this critical level, the path the cryptocurrency will take remains uncertain. As the Glassnode analyst points out, “Failure to sustain above this level may point towards a more severe market correction.”
At the time of writing, Solana is trading at approximately $133, marking a decline of over 25% over the past week.
