SOL price

Solana eyes 40% jump in August despite long-term bearish signals

The bear flag setup for SOL price could result in another interim relief rally amid macro headwinds.

Solana (SOL) dipped to a two-week low at around $35.50 on July 26, mirroring downside moves elsewhere in the crypto market. Nonetheless, the technicals suggest that Solana’s price flirts with the prospects of rising 40% in August.

SOL hits key inflection point

Ironically, the bullish setup for Solana emerges out of a classic bearish continuation pattern.

On the daily chart, SOL’s price has been consolidating inside what appears to be a “bear flag,” a technical pattern that develops during a downtrend and gets resolved after the instrument exits it with further price drops.

The so-called bear flag breakdown has not happened yet. Instead, SOL has been holding the lower trendline as support, raising possibilities of a sharp rebound toward the upper trendline, as illustrated in the chart below.

SOL/USD daily price chart featuring ‘bear flag.’ Source: TradingView

The rebound setup exposes SOL to a potential rally toward $49.50 in August, up 40% from July 26’s price. The $49–$50 level had served as both support and resistance in May.

Solana network performance still a concern — researcher

The potential bear flag rebound will serve as interim relief to Solana bulls, given SOL’s overall bias remains skewed to the downside.

Macro forces such as the Fed’s hawkish monetary policies and the collapse of the $40 billion “algorithmic stablecoin” project Terra (LUNA) — now renamed Terra Classic (LUNC) — have sent the crypto market into a tailspin. As a result, Solana, like any other risky asset, has suffered declines across its financial and network usage metrics in 2022.

For instance, the average number of daily transactions atop the Solana blockchain plunged by 17.6% in Q2/2022 versus the previous quarter, according to data from Messari.

Meanwhile, Solana’s revenue dropped 44.4% quarter-on-quarter (also because of recurring network outages).

Solana Financial Overview Q2/2022. Source: Messari

“As seen in 2021 and throughout Q1 and Q2, degraded network performance decreases network usage and reduces the network’s continued flow of revenue,” noted James Trautman, a researcher at Messari, adding:

“If Solana were to continue to experience degraded performance that lasts for a material amount of time, a resulting drag on fundamental usage may catalyze volatility and drag on network value.”

Bear flag breakdown?

The mix of macro and network-related concerns risk triggering the bear flag breakdown by September.

Related: All ‘Ethereum killers’ will fail: Blockdaemon’s Freddy Zwanzger

SOL’s decisive close below the flag’s lower trendline means more downside is likely to the $21–$23 region, according to the technical setup illustrated below.

SOL/USD daily price chart featuring bear flag breakdown setup. Source: TradingView

In other words, a 35%–38% drop from current price levels.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Solana price enters correction territory after 80% monthly gains

SOL’s bear flag setup sees its price declining to $21 by September 2022.

Solana (SOL) ticked modestly lower on July 20 after testing a critical technical resistance, suggesting further pullback moves in the coming weeks.

SOL price eyes 50% wipeout

SOL’s price decreased by over 4% to $44 after failing to breach a multi-week ascending trendline resistance. Interestingly, this resistance level comes as a part of what appears to be a bearish continuation pattern dubbed the “bear flag.”

A previous test of the same resistance trendline in late June had preceded a 30%-plus price drop, illustrating a higher distribution sentiment among SOL traders near the level. Therefore, the latest pullback from the same range could lead to an extended downside retracement. 

SOL/USD daily price chart. Source: TradingView

Meanwhile, the bear flag’s lower trendline has been capping SOL’s sharp pullback moves. As a result, SOL’s extended correction scenario could have its price hit the support level, now near $35.40 — a 20% drop from current price levels.

Additionally, a decisive close below the lower trendline would risk triggering the bear flag breakdown setup, wherein the price falls by as much as the height of the downtrend (called “flagpole”) that preceded the flag’s formation.

SOL/USD daily price chart featuring “bear flag” breakdown scenario. Source: TradingView

That puts SOL on the road to levels near $21 by September, down over 50% from July 20’s price.

What experts are saying about Solana

The bear flag setup appears after SOL’s 80%-plus price rally since June 14, primarily driven by a similar recovery across the crypto market.

For instance, Ether (ETH), Solana’s top rival in the smart contract space, has risen over 85% more than a month after bottoming out locally at $880. Similarly, Bitcoin (BTC) is up 35% in the same period.

SOL/USD and BTC/USD daily correlation coefficient at 0.97. Source: TradingView

Independent market analyst Altcoin Sherpa sees SOL’s price rising to the $60–$80 area in 2022 if Bitcoin continues to climb.

Conversely, Andrey Diyakonov, chief commercial officer at Choise, notes that demand for SOL could drop due to Ethereum’s transition to proof-of-stake in September.

“The new Ethereum protocol has the same advantages as Solana, and investors may choose to stick with Ethereum should the high gas fees and scalability woes be solved,” Diyakonov explained.

Related: 3 reasons why Solana can repeat Ethereum’s 2018 fractal to 5,000% gains

Paweł Łaskarzewski, co-CEO at Synapse Network, fears SOL’s ongoing price rally could be a bull trap, noting that SOL, alongside the rest of the crypto market, still faces macro hurdles led by higher inflation and rising lending rates.

He said:

“We might see small ups on the price of Solana but due to the current market state, I would not expect any big changes”

Solana funds add $110.8M in 2022

Meanwhile, institutional interest in Solana continues to look better compared to Ethereum, according to CoinShares’ latest weekly report.

Net flows into crypto funds in 2022 (by assets). Source: CoinShares

Notably, Solana-backed funds have attracted $110.8 million into its coffers since the beginning of this year. In comparison, Ethereum-based investment vehicles have witnessed withdrawals worth $446.1 million from their reserves in the same period, including $2.5 million in the week ending July 15.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

3 reasons why Solana can repeat Ethereum’s 2018 fractal to 5,000% gains

Solana’s price can mimic Ethereum’s impressive recovery after the 2018 bear market, analysts argue.

Solana (SOL) still has room to fall in the near term, but SOL/USD can rally 5,000% if it follows in the footsteps of its top rival Ethereum. 

That Ethereum 2018 fractal

SOL risks dropping to $15 on anticipations it would behave like Ethereum during the market crash in 2018.

Notably, Ethereum’s native token Ether (ETH) price fell to nearly $79 in December 2018 after undergoing a 95% correction earlier that year from its peak of $1,529. Afterward, it underwent a long recovery, rising nearly 6,000% over the next four years and thus hitting a record high of around $4,950 in November 2022.

ETH/USD three-day price chart. Source: TradingView

Solana, which rivals Ethereum for its top spot in the smart contracts sector, has fallen by over 85% after peaking out in November 2021 at nearly $267. That leaves the token with the room to fall by another 10% when measured from its said record high.

Popular analyst PostyXBT says SOL could decline to $15, thus mirroring Ethereum’s bear cycle in 2018. What’s more, the Solana token could see an Ethereum-like recovery in the coming years that could take SOL price to over $750, he adds.

Meanwhile, another popular analyst, Spencer Noon, thinks on the same lines, albeit without sharing a clear upside target.

Noon argues that Solana has been going through a “disillusionment” phase that plagued the Ethereum market in 2018, noting that the project would eventually overcome its difficulties.

“Solana has a vibrant developer ecosystem, and its downtime issues are solvable. This will be obvious in retrospect,” he said.

Solana funds attract $110M in 2022

Solana-based investment funds have attracted over $110 million in inflows in 2022 as of July 1, compared to $450.9 million that exited Ethereum funds, according to a recent weekly report by CoinShares. 

Net inflows into/out of crypto funds by assets. Source: CoinShares

The fund inflows appear as Solana’s market capitalization gradually creeps toward Ethereum’s following its launch in March 2020.

The Ethereum/Solana market cap ratio is currently around 32.5 versus the December 2020 peak of 525.3, according to data tracked by TradingView.

ETH/USD to SOL/USD market cap ratio. Source: TradingView

The metrics suggests a strong capital shift into the Solana ecosystem, a trend that may continue in the coming years. 

NFT volume

Solana is also posing a serious challenge to Ethereum based on other key metrics.

Related: Traders debate whether Solana (SOL) is a buy now that it’s down 87% from its all-time high

For instance, according to Nansen, Solana’s weekly volumes across major nonfungible token (NFT) marketplaces, including OpenSea and MagicEden, have been in a constant uptrend, whereas Ethereum’s have tapered off in recent months.

Ethereum NFT volume (left) versus Solana’s (right). Source: Nansen

Solana fees vs. Ethereum

Additionally, cheaper fees are the primary reason why NFT volumes on the Solana blockchain have risen compared to Ethereum, according to Arcane Research’s latest weekly report. 

“The pace of the Ethereum blockchain network has decreased while transaction costs have increased, making way for Solana-based NFT marketplaces to pick up steam,” the report noted, adding:

“The average transaction fee on Ethereum was $6.5 in June, in contrast to the few cents users currently pay for block space on Solana.

Similar to NFT volume, the amount of gas fees paid has also seen a strong uptrend since summer 2021 with a smaller drawdown from its peak. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

SOL price trending toward yearly low as Solana TVL drops $870M in three days

DeFi contagion fears and bearish technicals mean additional downside pressure on Solana price.

Solana (SOL) tumbled on June 16 amid a broader retreat across the top cryptocurrencies, led by the Federal Reserve’s 0.75% interest rate hike a day before.

Solana price rebound fizzles

Notably, SOL/USD plunged nearly 17% to $30 a token, wiping out almost all the gains from the day before. The SOL price volatility liquidated almost $10 million worth of contracts in the past 24 hours across multiple crypto exchanges, data from Coinglass shows. 

SOL liquidation record since May 17. Source: Coinglass 

The latest declines come as an extension to SOL’s broader correction, where it dropped by more than 90% after peaking out near $267 in November 2021. SOL also fell to its lowest level since July 2021 near $25.

In addition, a higher interest rate environment and the collapse of high-profile crypto projects like Terra have strengthened SOL’s downside prospects. 

SOL paints “ascending triangle”

Solana’s pullback move on June 16 began after testing a horizontal trendline resistance near $34 that constitutes what appears to be an “ascending triangle” pattern.

Ascending triangles are continuation patterns, i.e., they tend to send the price in the direction of their previous trend. As a rule, breaking out of a triangle pattern in a bearish market, for example, sends the price down by as much as the structure’s maximum height.

If SOL breaks below its ascending triangle’s lower trendline then the bearish profit target will come below $22.50, as shown in the chart below.

SOL/USD four-hour price chart featuring “ascending triangle” pattern. Source: TradingView

Solana’s downside target is about 25% below June 16’s price and could be achieved by the end of June. Nonetheless, if SOL bounces after testing the triangle’s lower trendline as support, it would eye the $34–$36 range as its interim upside target.

Massive SOL exit

Over 27 million Solana tokens have exited its smart contract ecosystem since June 13.

The total value locked (TVL) inside Solana smart contracts dropped to 74.65 million SOL (~$2.25 billion) on June 16, down 27% in the last three days, according to data tracked by DeFi Llama. That amounts to nearly $840 million of withdrawals from the ninth-largest blockchain ecosystem by market cap.

Solana TVL performance since April 2021. Source: DeFi Llama

Solend, a lending platform functioning atop the Solana ledger, witnessed a 26.5% decline in its TVL in the last three days and was holding 9.66 million SOL (~$290 million) as of June 16. Nevertheless, it remains the leading platform by TVL within the Solana ecosystem.

Related: Liquidity provider asks platforms to freeze 3AC funds to recover assets after litigation

The outflows indicate that depositors do not want to keep their SOL locked in DeFi protocols, a sentiment common across the sector after Terra, an “algorithmic stablecoin” project, collapsed last month.

Therefore, Solana’s path of least resistance remains skewed to the downside in the near term, particularly with no improvement in terms of macro and fundamentals. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Solana price just one breakdown away from a 40% slide in June — here’s why

Network outages and decreasing smart contract reserves add further downside pressure to SOL price.

Solana (SOL) is nearing a decisive breakdown moment as it inches towards the apex of its prevailing “descending triangle” pattern.

SOL’s 40% price decline setup

Notably, SOL’s price has been consolidating inside a range defined by a falling trendline resistance and horizontal trendline support, which appears like a descending triangle—a trend continuation pattern.

Therefore, since SOL has been trending lower, down about 85% from its November 2021 peak of $267, its likelihood of breaking below the triangle range is higher.

As a rule of technical analysis, a breakdown move followed by the formation of a descending triangle could last until the price has fallen by as much as the triangle’s maximum height. This puts SOL’s bearish price target at $22.50 in June, down about 40% from June 10’s price.

SOL/USD daily price chart featuring “descending triangle” breakdown setup. Source: TradingView

But not all descending triangles lead to breakdowns, suggests a study conducted by Samurai Trading Academy. Notably, the likelihood of a descending triangle setup reaching its profit target is seven out of 10, based on the pattern’s history.

So that leaves SOL with a roughly 30% chance of avoiding a breakdown and rebounding.

Solana’s rebound scenario

Descending triangles that form during downtrends but still lead to price reversals typically mark the bottom of the asset’s bearish cycle.

Suppose SOL holds strong above the triangle’s horizontal trendline support. Then, the SOL/USD pair could break above the structure’s falling trendline resistance, and rise by as much as its maximum height, which puts its upside target around $65, up about 72% from June 10’s price.

SOL/USD daily price chart featuring descending triangle reversal setup. Source: TradingView

The descending triangle’s bullish profit target also coincides with SOL’s 50-day exponential moving average (50-day EMA; the red wave) near $59.

Meanwhile, SOL’s daily relative strength index (RSI), which has been reversing from its oversold threshold of 30 since May 12, also boosts the token’s upside prospects.

Solana TVL drops 75% from peak

Meanwhile, Solana’s fundamentals are mixed.

As a blockchain network, it had performed poorly in recent months due to back-to-back outages. The total value locked (TVL) inside Solana’s smart contracts has crashed to $3.69 billion, down 75% from its December 2021’s record high of $14.83 billion, data from Defi Llama shows.

Solana TVL performance history. Source: Defi Llama

On the bright side, Solana experienced sustained growth in network usage, developer activity, network infrastructure and overall ecosystem in the first quarter of 2022, according to a study penned by James Trautman, a researcher at U.S.-based crypto analytics firm Messari.

An excerpt reads:

“Several factors contributed to the Q1 results, including the continued growth of new NFTs and NFT markets, diversification of TVL, improvements in UX and new applications across several sectors outside of DeFi.

Related: Is Solana a ‘buy’ with SOL price at 10-month lows and down 85% from its peak?

On June 8, Solana’s venture capital arm launched a $100 million investment and grant fund to support its blockchain-based products in South Korea, a country whose crypto sector stands damaged by the recent collapse of Terra (originally LUNA, now, a $40 billion “algorithmic stablecoin” project. 

The decision expects to attract developers that want to migrate their projects from Terra to Solana, which could lead to a higher demand for SOL.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Sold your SOL? Solana price eyes 35% jump as two technical signals flip bullish

Solana’s nearly 80% year-to-date decline is likely to follow up with some relief rallies, technicals suggest.

At least two technical indicators show Solana (SOL) could undergo a sharp price recovery in June, even after the SOL/USD pair’s 78.5% year-to-date decline.

SOL price nears bullish wedge breakout

First, Solana has been painting a “falling wedge” since May, confirmed by its fluctuations inside two descending, converging trendlines. Traditional analysts consider falling wedges as bullish reversal patterns, meaning they resolve after the price breaks above their upper trendlines.

As a rule of technical analysis, a falling wedge’s profit target is measured after adding the maximum distance between its upper and lower trendlines to the breakout point. So depending on SOL’s breakout level, its price would rise by roughly $20, as shown below.

SOL/USD daily price chart featuring “rising wedge” breakout setup. Source: TradingView

That puts the SOL’s price target at $58 if measured from the current price, or about 35% higher. But if the price retreats after testing the wedge’s upper trendline and continues to fluctuate inside its range, SOL’s profit target would keep getting lower.

The Solana token can rise to at least $44 after breaking out of its wedge pattern.

Bullish divergence

More upside cues for Solana come from a growing separation between its price and momentum trends.

In detail, SOL’s recent downside moves accompany an upside retracement in the readings of its daily relative price index (RSI), a momentum oscillator that detects an asset’s overbought (>70) and oversold (

SOL/USD daily price chart featuring price-momentum divergence. Source: TradingView

This situation, otherwise known as “bullish divergence,” shows that bears are losing control and that bulls would capture the market again.

Solana still faces bearish risks

Financial market veteran Tom Bulkowski believes falling wedges are poor bullish indicators, however, with a higher breakeven failure rate of 26%. Meanwhile, there is only a 64% chance that a falling wedge would meet its profit target, which leaves Solana with the possibility of continuing its downtrend.

Related: Solana developers tackle bugs hoping to prevent further outages

Bulkowski asserts:

“The only variation that works well is a downward breakout in a bear market.”

Fundamentals around Solana agree with a downside outlook. They include a hawkish Federal Reserve and the negative impact of their tightening on riskier assets, including cryptos and equities.

As a result, SOL could move lower under the said macro risks, with its next potential downside target in the $19–$25 area, as shown below.

SOL/USD weekly price chart. Source: TradingView

This range was instrumental as support in the March–July 2021 session.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.