This article is available in Spanish.
At the end of the first week of September, the price of Solana (SOL) reached $124, raising concerns among investors as the fifth-largest cryptocurrency risks crossing the critical $100 threshold.
According to market analyst Ali Martinez, recent technical analysis indicates that a sustained close below the channel lower limit at $126 could trigger a significant price correction for Solana, potentially falling to $110 or even $90.
Solana Prize Challenges
In an update on social media, Martinez elaborated on current market conditions, noting that the TD Sequential indicator was previously a buy signall on the daily chart. This suggested a possible recovery for Solana from the lower limit of its trading channel to higher levels at $154 and $187.
However, the ongoing sell-off in the broader market has offset this bullish signal, causing Solana to suffer to lose of approximately 20% in the past two weeks and 13% in the past month.
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Despite these challenges, there remains a glimmer of hope for Solana’s recovery. Martinez pointed to one historical pattern This indicates that Solana typically experiences a price increase in the two weeks leading up to the ‘Breakpoint event’.
In 2021, the cryptocurrency rose by 35%, the following year by another 35% and in 2023 by 60%. With just 16 days to go until the 2024 ‘breakpoint event’, the analyst suggests that this trend of recent years could continue, which would mark a significant recovery for the token.
If the historical pattern holds, Solana could potentially rise 35% towards $167, but remain just below $167 upper limit from its current channel at $187. However, as Martinez noted, it is critical that SOL recovers and consolidates above the $126 level in the coming days to avoid further declines.
Capital inflows from FTX creditors and historically bullish fourth quarter
What gives even more hope to SOL investors is that the post-Bitcoin (BTC) halving events in the fourth quarter have historically shown bullish trends, indicating a potential market recovery that could also significantly benefit SOL.
Adding to this hopeful outlook, now-defunct crypto exchange FTX will distribute more than $16 billion in cash to creditors affected by its collapse. This influx of capital into the market could mean substantial returns, particularly impacting four major cryptocurrencies.
Analyst OxNobler highlights that a majority of affected FTX customers are retail investors, indicating that a significant portion of recovered funds are likely to re-enter the crypto market.
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It is expected that a substantial portion of these funds will flow into Bitcoin and other dominant funds cryptocurrencies such as Ethereum (ETH), Solana and Binance Coin (BNB). The expected capital return could not stabilize the market, but could also provide an opportunity for price increases for these assets.
However, it remains to be seen if this is indeed the case, but if it is, it could be a much-needed catalyst for the market following the strong sell-off activity that the market’s largest cryptocurrencies have experienced in recent months.
Featured image of DALL-E, chart from TradingView.com
