The cryptocurrency sector is in a deep correction and recent reports show that the majority of digital currencies are down more than 70% from their 2021 highs. Solana is on that list and investors are on the fence about whether the token has solid enough fundamentals to warrant a purchase of Solana. (SOL) at its current value.
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 of the price breakouts fail to reach their daily high.
SOL/USDT 1-day chart. Source: TradingView
Despite the bleak outlook, there are some potential positives that could make Solana a project to watch once the broader market enters the consolidation phase.
The price of SOL received a quick boost late last week after the June 23 announcement that the project would launch the Solana mobile package, which enables native Android Web3 apps on Solana.
To go along with the new smartphone operating interface, Solana also revealed that it will launch its own “Saga” Android phone with Solana Mobile in a bid to lead the way on Web3-enabled devices.
Web3 and Metaverse are two topics that have emerged from the 2021 bull market and point to the future where blockchain technology is headed. The move by Solana shows that despite its short-term struggles, it continues to evolve for the future and looks forward to playing a role in the broader adoption of blockchain and cryptocurrency.
The low-fee nature of the Solana blockchain makes it an ideal candidate for non-fungible tokens (NFT) projects and game DApps, and the release of a mobile technology package is the next step in creating broader access to these technologies.
If the developers can solve the issues that are still causing the Solana network outage, the token has a chance to be a major contender once the broader market turns bullish again.
Short-term pain is to be expected, but the basics are improving
While it’s good to look ahead to what the distant future may hold, the truth is that the short-term outlook for Solana and the broader cryptocurrency ecosystem is somewhat unattractive.
An insight into the lower price points to watch was provided by crypto trader and Twitter user Crypto Tony, who posted the following chart warning traders not to fall for the first test of a major support level.
SOL/USDT 1-week chart. Source: Twitter
Krypto Tony said,
“The first order zone has been tested, hence this reaction, but you really want to call the bottom after the first test…”
Based on the provided chart, the lower support levels noted for Solana are at $13.50 and $3.50.
Market analyst and Twitter user with the pseudonym Crypto Patel also anticipates a further decline in the near term for SOL due to the strong amount of resistance present in the 200-day exponential moving average (EMA).
4-hour SOL/USDT chart. Source: Twitter
Krypto Patel said,
“After breaking and retesting the $40 area, support turns into resistance […] It faces resistance at 200EMA. Anytime it can give a negative move. Sell: $38.5, Stop Loss: $43.2, Take Profit: $27.”
Related: SOL price expects 75% higher as Solana plots bullish reversal pattern
Is SOL in the early stages of recovery?
A more optimistic view of Solana was given by Twitter user Trader McGavin, who posted the following chart highlighting the important resistance levels at $60, $74 and $95.
SOL/USDT 1-day chart. Source: Twitter
The analyst said,
“A double bottom after breaking out of the wedge and bouncing back up. One of the first to bounce off the bottom and could head to $48.”
The importance of maintaining current price levels was also touched upon by the crypto trader and Twitter user pseudonym Altcoin Sherpa, who posted the following chart noting the bullish signal provided by the medium-term EMAs.
4-hour SOL/USDT chart. Source: Twitter
Altcoin Sherpa said,
“$SOL: Still a do-or-die zone in the lower time frames; this is the first time we’ve seen some exponential moving averages flip higher since March. Longing in the mid-$30s is my current plan as a scalp since I missed selling on top.”
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.