Solana (SOL), one of the best-performing cryptocurrencies on the market, recently experienced a 9% pullback after failing to reclaim the crucial $160 resistance level.

As a result of the recovery that occurred within 48 hours until May 8, 2024, Solana's price fell below $146. However, despite this short-term setback, on-chain data and technical indicators suggest the rally may not be over yet.

In May, Solana's price action featured a notable surge driven by speculative traders who poured in more than $260 million in new capital inflows. The cryptocurrency opened the month at $118.74 and quickly rose 34% by May 6, briefly reaching $159. Although the subsequent abandonment of the $160 resistance led to a slight correction, Solana's bullish investors did not give up.

A key indicator of this unwavering confidence is recent betting activity on the Solana network. According to StakeRewards.com, Solana investors decided to stake an additional 3.3 million SOL, worth approximately $490 million at current prices, during the ongoing pullback.

This move effectively removes these coins from short-term market supply, potentially easing selling pressure and allowing investors to earn passive income while they wait for a parabolic price breakout.

The rate trend is especially important when considered in conjunction with Solana's open interest (OI) data. Over the past 30 days, Solana's OI has decreased by 40%, to $1.78 billion as of May 9.

While a sharp decline in OI typically signals uncertainty among traders, Solana's recent history of rapid recovery from price declines suggests that short positions totaling $125 million could be at risk if the cryptocurrency recovers to its May 7 price of $157.

Technical indicators also paint a bullish picture for Solana. The Bollinger Band indicator suggests that Solana price is more likely to break towards $200 than lose the $120 support level.

As long as SOL is able to maintain its position above the 20-day SMA price mark at $144, bulls may regroup for an attempt to reach the $200 mark in the coming weeks.

Despite all the problems, Solana remains a strong contender in the ongoing competition with Ethereum. Recent results suggest that the Solana network could overtake Ethereum in transaction fees, and this could potentially trigger a price spike.

Looking ahead, technical analysis indicates that Solana is entering a new bullish cycle. The MACD and signal lines turn positive, producing a bullish crossover, while the daily RSI line shows a bullish divergence as the uptrend gains momentum.

If Solana's price can cross the 78.60% Fibonacci level, the altcoin could reach $258 in May. On the other hand, a reversal from the $165 supply zone or 61.80% Fibonacci level could result in a retest of the $150 or $135 support levels.