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As the first week of September came to a close, the price of Solana (SOL) settled at $124, raising concerns among investors as the fifth-largest cryptocurrency is at risk of breaching the critical $100 threshold.
According to market analyst Ali Martinez, a recent technical analysis noted that a sustained close below the channel’s lower boundary at $126 could trigger a significant price correction for Solana, potentially dropping to $110 or even $90.
Solana Price Challenges
In a social media update, Martinez explained current market conditions, noting that the TD Sequential Indicator had previously shown a buy signal on the daily chart. This suggests a possible rebound of Solana from the lower boundary of its trading channel towards higher levels at $154 and $187.
However, the continued sell-off in the broader market invalidated this bullish signal, causing Solana to suffer. losses by about 20% over the last two weeks and 13% over the last month.
Related Readings
Despite these challenges, there remains a glimmer of hope for Solana’s recovery. Martinez stressed historical model indicating that Solana typically experiences a price spike in the two weeks leading up to its “Breakpoint event.”
In 2021, the cryptocurrency jumped 35%, the following year it rose another 35%, and in 2023 it climbed 60%. With just 16 days to go until the “watershed event” in 2024, the analyst suggests that this trend of the past few years could continue, which would mean a significant recovery for the token.
If the historical pattern holds, Solana could potentially climb 35% towards $167, but remain just below the upper limit from its current channel at $187. However, as Martinez pointed out, the key is for SOL to recover and consolidate above the $126 level in the coming days to avoid further declines.
FTX Creditors Capital Inflows and Historically Bullish Q4
Further adding some sense of hope for SOL investors, the fourth quarter post-Bitcoin (BTC) halving events have historically shown bullish trends, suggesting a potential market recovery that could also significantly benefit SOL.
Adding to this optimistic outlook, now-defunct cryptocurrency exchange FTX is set to distribute more than $16 billion in cash to creditors affected by its collapse. This influx of capital into the market could signal a substantial return, particularly affecting four key cryptocurrencies.
OxNobler Analyst highlights that a majority of affected FTX customers are retail investors, indicating that a significant portion of the recovered funds are likely to re-enter the cryptocurrency market.
Related Readings
A substantial portion of these funds are expected to be invested in Bitcoin and other dominant cryptocurrencies. cryptocurrencies such as Ethereum (ETH), Solana and Binance Coin (BNB). The early return of capital could not only stabilize the market, but also present an opportunity for prices of these assets to increase.
However, it remains to be seen if this is indeed the case, but if so, it could be a much-needed catalyst for the market after the heavy selling activity that the largest cryptocurrencies in the market have seen in recent months.
Featured image of DALL-E, chart from TradingView.com
