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The broader cryptocurrency market saw a steep plunge last Friday, with a significant liquidation volume north of $550 million logged in long orders. The total market capital fell below the crucial $1 trillion heading into the weekend as hopes of a positive weekly close petered out. Bitcoin led the retracement shedding more than $3,000 between Friday and Saturday. The slump in Bitcoin (BTC) price was characteristically reflected in the price action of other altcoins, including Ethereum (ETH) and Solana (SOL). The latter slipped under $40 on Friday before seeing more losses through the weekend.
Market data at the time of writing shows that most tokens have stopped bleeding and are trading in the green on the day. The 7-day changes remain red across top altcoin markets as the weekend erosion wiped a significant chunk of gains recorded in the first half of the month. Solana (SOL), in particular, is one of the struggling assets among the top 10 cryptocurrencies by market capital.
The SOL/USD pair is trading 2.75% up in the last 24 hours, but overall, it is still down roughly 19% over the past seven days, according to CoinMarketCap data. Only Polkadot (DOT) has printed a bigger loss during this period among the top 10 cryptocurrencies by market capital.
Solana yet to reclaim $50 since May
While the recent price action is not necessarily a reflection of the performance of an individual ecosystem – Solana in this case – it nonetheless puts holders of the SOL token in a difficult situation. For starters, all attempts to breach $50 have been shot down; the latest effort resulted in a 30-day high of $47.96 per CoinMarketCap. The last time SOL hovered above this level was on May 23. Markedly, the weekend losses also saw the token crash further, revisiting the sub-$35 zone and consequently flipping the previously support zones to resistance.
Investing.com data confirms that the SOL/USD pair wound down the week (ending Aug 21) with bearish sentiment seeing a negative weekly return of 24.24%. Thus far, Solana (SOL) has only recorded three positive monthly closes since the start of the year – two coming before the three-successive monthly closes between April and June. Last month, the token printed a green monthly candle of 25.68%, but current prices at the time of writing indicate a decline of 16.89% since the start of the month.
Coin Bureau host suggests Solana is underrated because of recent bad press
In a YouTube video posted on Aug 18, the pseudonymous host of Coin Bureau sided with remarks from FTX CEO Sam Bankman-Fried on Solana being an underrated token. Guy outlined a bullish outlook for Solana, projecting the token’s price to rally and even double if it holds onto the market momentum.
Referencing the SOL/ETH weekly chart, the Coin Bureau host noted that Solana (SOL) has established a trend of losing value relative to Ether (ETH) for five to six weeks before charting a recovery course lasting one to three weeks. Guy pointed out that the period of relative value loss, which was six weeks at the time, could end as the Merge approaches. This, he noted, put Solana (SOL) in positions to chart a multiweek rally relative to Ether which he also expects to gain against fiat.
The popular crypto influencer also observed that some investors are closely tracking Ethereum-killers like Solana (SOL) and Avalanche (AVAX) as they stand to gain in case the Merge event doesn’t go as planned. Though Guy acknowledged that gains accrued by Solana (if his prediction holds) might not be significant, he pointed out that the price appreciation relative to other larger cap crypto assets would make it a better performer.
He, however, cautioned that the projected rally would be short-lived as the wider market is still in crypto winter. The performance of the token after this potential correction, in his opinion, will heavily hinge on development milestones within the Solana ecosystem.
Solana (SOL) price action
The SOL/USD weekly chart indicates that bulls are holding at $31 as the current key support while aiming to gain ground above $35. While the price movement of the token in the last couple of hours suggests relatively fewer sell orders in the market, defense against more declines remains paramount to avoid a bearish run towards $20.
Solana technical indicators largely show that the token is at risk of posting more losses. The 20-, 50-, and 100- Simple and Exponential Moving Averages on the daily chart all lean towards ‘sell’ orders, while the Relative Strength Index (14), corresponding to 39.3635 at the time of writing, gives the impression of a neutral market.
To learn more, visit our Investing in Solana guide.
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.