The cryptocurrency sector is caught in a deep correction and recent news shows that most altcoins are down more than 70% from their 2021 highs. Solana is among that list, and investors are undecided as to whether the token has fundamentals good enough to justify an investment in SOL at its current valuation.
Data from Cointelegraph Markets Pro and TradingView shows that SOL is down 87.5% from its all-time high, and given the current state of the market, most price breakouts fail to make a daily high.
Despite the gloomy outlook, there are some positives that could make Solana a project to watch once the broader market enters a consolidation phase.
The price of SOL received a quick boost late last week following the June 23 announcement that the project would release a Solana mobile stack that enables native Android Web 3.0 applications on Solana.
To accompany the new smartphone operating interface, Solana also revealed that it will launch its own “Saga” Android phone through Solana Mobile in an effort to lead the way in Web 3.0 compatible devices.
Web 3.0 and the metaverse are two of the themes that emerged from the 2021 bull market and point to the future where Blockchain technology is headed. This move by Solana demonstrates that despite short-term struggles, it continues to build for the future and seeks to play a role in the broader adoption of Blockchain technology and cryptocurrencies.
The low-cost nature of the Solana blockchain makes it an ideal candidate for non-fungible token (NFT) projects and gaming dApps, and the launch of a mobile phone technology stack is the next step in creating broader access to these technologies.
If the developers manage to resolve the issues that continue to cause the Solana network outages, the token has a chance to be a major contender once the broader market returns to an upward trend.
It feels like me $SUN is going thru a similar trough of disillusionment as $ETH did back in 2018. In bear markets prices aren’t just reflexive—sentiment is too. @solarium has a vibrant developer ecosystem and its downtime issues are solvable. This will be obvious in retrospect.
— spencernoon.eth (@spencernoon) June 27, 2022
Short-term pain expected, but fundamentals improve
Although it is nice to watch and contemplate what the distant future may hold, the reality is that the short-term prospects for Solana and the crypto ecosystem in general are anything but attractive.
Cryptocurrency trader and pseudonymous Twitter user Crypto Tony, public The chart below warned traders not to jump into positions on the dip to a major support level and offered insight into lower price points to watch out for.
“The first demand zone was tested, hence this reaction, but you really want to call a bottom after the first pullback to that zone…”
Based on the chart provided, the lower support levels to watch for Solana are found at $13.50 and $3.50.
Market analyst and pseudonymous Twitter user Crypto Patel also predicts more short-term declines for SOL due to a strong amount of resistance found at the 200 day exponential moving average.
The analyst said:
“After the breakout and back to the $40 area, supports turn into resistance […] Facing resistance at the 200EMA. At any time there can be a downward movement. Sell: $38.5, Stop Loss: $43.2, Take Profit: $27″.
Is SOL in the early stages of a recovery?
A more bullish outlook for Solana was offered by pseudonymous Twitter user Trader McGavin, who posted the chart below highlighting the major resistance levels at $60, $74 and $95.
The analyst said:
“Double bottom after breaking out of the wedge and bouncing higher. One of the first to bounce off the bottom and can head to $48.”
The importance of maintaining current price levels was also touched on by trader and pseudonymous Twitter user, Altcoin Sherpa, who public the chart below highlighting the bullish signal provided by the medium-term EMAs.
“SUN – Still in a do-or-die zone on the shorter time frames, this is the first time we have seen some of the medium-term EMAs turn bullish since March. My current plan is to go long mid-$30 as a scalper since I missed the short raise”.
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