Why Solana’s Price Could Drop 60%

Solana (SOL) price could decline again towards $4 due to bearish indicator readings and negative Solana news.

SOL is the native token of the Solana blockchain platform. Solana is unique because it Proof-of-History (POH) consensus uses both and combines it with the more well-known Proof-of-Stake (PoS) consensus mechanism. The platform was founded by Anatoly Yakovenko and specializes in smart contracts.

There were conflicting reports from Solana last week. On December 23, Delphi Digital announced That Solana was now the number two ecosystem for NFTs, behind only Ethereum. Solana outperformed Cardano, Polygon, and the BNB chain when measuring 30-day sales volume.

However, the news of negative Solana came after three days. DeGods and y00ts, two of the most important NFT projects in the Solana ecosystem, have announced they are migrating to Ethereum and Polygon, respectively. Once that happens, it’s possible that Solana may fall out of the top 10 sales volume entirely. While there are rumors that both projects have sought funding from the Solana Foundation to remain on the blockchain, this is yet to be confirmed.

Solana’s price hasn’t dropped

solana price Declined from its all-time high of $259.90 in Nov 2021. Between May – November 2022, SOL price bounced against the $29 horizontal support area. However, it broke in the middle of a heavily bearish candlestick on 14th November. Before the end of the month, SOL price reached a low of $10.94.

Even though the decrease has been considerable since the breakdown, the most likely SOL price forecast is a continuation of the decline towards $4. There are two major reasons for that:

  1. Weekly RSI, which has fallen below 25 and has not generated any bullish divergence
  2. The fact that there is no horizontal support until $4

Besides, SOL price is in the process of correcting lower from its low of $10.94 and invalidating the higher weekly candlestick of November 21-28.

Measured against the current price, a drop of $4 would equate to a 64% drop.

For the trend to be considered bullish, SOL price needs to retest the $29 horizontal resistance area.

Solana Price Long Term Resistance
SOL/USDT Weekly Chart. Source: TradingView

no short term relief

Readings from the daily time frame align with the weekly. Firstly, SOL token price broke above the $13 horizontal zone. This comes after the first two bars validate the area as support (green icon).

Next, the daily RSI broke above its bullish divergence trend line that preceded the previous relief rally. As a result, a short-term rally is likely, and the long-term downward movement will now continue for the next 24 hours and beyond.

sol price short term
SOL/USDT six hour chart. Source: TradingView

To conclude, the Solana price forecast is most likely bearish, favoring a decline towards the $4 horizontal support area.

Additionally, negative Solana news related to the abandonment of the two largest NFT projects in the Solana ecosystem could accelerate the decline.

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