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The analytics firm Glassnode has revealed the Solana price levels that could be important to watch, based on on-chain accumulation data.
Solana Cost Basis Distribution Reveals Where Supply Is Most Concentrated
In a new post on X, Glassnode has discussed about the UTXO Realized Price Distribution (URPD) of Solana. The URPD is an indicator that basically tells us about how much of the SOL supply was purchased at which price levels. Naturally, the metric uses the last transaction price of any token in circulation as its cost basis.
First, here is how the URPD looked when the cryptocurrency set its new all-time high (ATH) back in January:
From the graph, it’s apparent that a few price levels like $144 stood out in terms of the amount of supply that they hosted. At the price levels closer to the new ATH, however, supply was quite thin, meaning not many coins changed hands there.
In on-chain analysis, the potential of any level to act as support or resistance is measured in terms of the amount of supply that it hosts. This means that levels that have a large cluster around them on the URPD are the ones of importance to the asset.
As for why this is so, the answer lies in investor psychology: holders are sensitive to retests of their cost basis. Whenever the price touches a large cost basis cluster, the investors who are holding these coins may respond by making some panic moves.
These moves can tend toward buying if the retest is happening from above, as investors may want to defend their profit-loss boundary. In retests happening from below, however, the traders could react by selling instead, as they may seek to exit at their break-even.
When SOL reached its ATH, there was a lack of support nearby. This may be why the asset ended up falling into the cluster that did carry a significant amount of supply. Below is a chart that shows how the URPD has changed following the price drawdown.
From the graph, it’s visible that if SOL continues its downtrend, it may have to end up relying on the freshly grown $112 level. In January, this level hosted the cost basis of 4 million tokens, but today, the figure has grown to 9.7 million, equivalent to 1.67% of the entire supply.
Beyond this level, Glassnode notes, “$94, $97, and $100 collectively hold nearly 21M SOL (3.5% of supply).” In the scenario that these support levels fail, Solana may find itself in trouble, as there aren’t any major supply clusters until $53.
In terms of the levels above, the $135 and $144 levels stand out, as they hold the acquisition level of 26.6 million and 27 million coins, respectively. These levels could act as major obstacles in SOL’s recovery.
SOL Price
Solana has jumped more than 5% over the last 24 hours to recover to the $130 level.
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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