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A golden opportunity for incumbents? Solana’s analysis

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Over the past few days the FTX platform has been in the news, as the exchange has been recognized as insolvent and many users are unable to recover their funds. The investment fund Alameda has had to sell several cryptoassets, including the SOL token. The Solana project token has seen its price drop from $38 to $12, thus recording a -68% loss.

Is this a golden opportunity or the beginning of a fall into the abyss?

SOL/BTC pair analysis

SOL/BTC pair in 1W (Tradingview)

Since the previous BullRun, the SOL token has not really managed to outperform the market. In fact, the token has underperformed for the past ten months and current circumstances are unlikely to reverse the trend. This week we have seen a real “carrot” for the FTX issue, its investment fund had to divest itself of a large amount of tokens which created a lot of bearish pressure.Plotting a Fibonacci retracement, we note that we are back between 0.786/0.862 which also corresponds to a congestion level. In theory, the bottom should be created in the green zone, but SOL selling due to the FTX case could accelerate the move. This would only accentuate the underperformance of the chart and that is why I have drawn the “Last Support”. For me, this would be the highest point the pair could reach.

So the SOL/BTC chart has given us a lot of information that we will try to take into account in the analysis against the dollar, we will have to keep in mind that the token is weak and that this situation could get worse.

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A similarity with ETH (2017).

Fractal ETH 2017 in 3D (TradingView)

Before moving on to the pure SOL analysis, I thought it would be interesting to show you this 3D fractal. In yellow you will find a piece of the ETH chart in 2017, this one corresponded to the end of the bearish period. It is curious to see that the SOL has the same configuration and this week’s drop was also present in Ethereum in 2017. If the Solana token replicates the same pattern, it means that $12 was the bottom of this bear market.

Analysis vs. the dollar

GOLD/USD on 1D (Tradingview)

Here we are on the SOL heatmap (stock exchange: Coinbase) in daily view. We had been sideways between $27/$50 for 5 months, but unfortunately after the FTX sell-off we took a bearish resolution. It was relevant to see strong buying interest between $15 and $25, as many holders wanted to reload from the SOL at this price location and the drop on November 9 allowed these orders to be executed. Solana holders are not shying away from the dips and continue to place buy orders to buy back any bearish streak. This shows the extreme desire to push the price above $25 to continue the previous accumulation period.

Read also. We reveal the 3 corners to buy in times of crisis.

Knowing that a sell ≃ $10,000,000 represents -2%, we will have to remain vigilant for any large SOL liquidation as this could reinforce this bearish move even if we have strong buying interest. These massive liquidations cause huge selling forces that are difficult to control and unpredictable by technical analysis.

However, if the situation stabilizes, it would not be unreasonable to see a SOL back above $20, or even resume its sideways phase between $27/50.

Conclusion

In conclusion, I would say to keep an eye on the news as it dictates market movements. It is undeniable that SOL holders are showing buying strength and consider this to be a good long-term price, but a big sell-off could bring the price down. If the situation stabilizes, we could well follow the 2017 fractal with a small upside recovery in the coming months. This analysis is by no means investment advice, I encourage you to DYOR on your own.

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