Why The Solana Price Could Drop 30% And Still Look Good

The Solana price (SOL/USD) has reversed the recent gains and lost 15% in the last few days, and SOL may still fall further. However, due to its impressive performance, the price has plenty of room for manoeuvre. In fact, Solana could fall below $50.00 and still be in an uptrend.

The sun has been shining bright on decentralized finance project Solana lately. The SOL coin has enjoyed a parabolic rally that lifted its price to a new all-time high last week, making it one of the top-performing digital assets. As a result, in the last month, Solana’s market cap has sky-rocketed from under $7 billion to more than $20 billion as of time writing.

Of course, whilst this is partly due to the broad-based cryptocurrency rally, the jump in the Solana price comes on the back of improving fundamentals. Developers are increasingly turning to the Solana blockchain to build DeFi applications. Solana’s high throughput of 50,000 transactions per second and favourable fees has helped its TVL grow to more than $2 billion. This is certainly an encouraging milestone for the project, although still a relatively small percentage of the $157 billion market, dominated by Ethereum based applications. This growing adoption was highlighted by crypto titan Mike Novogratz who said developers favour Solana and Terra (LUNA/USD) over Cardano (ADA/USD).

As a result of the 280% rally since July, SOL has cleared several key resistance levels. Furthermore, the acceleration two weeks ago means the Solana price can afford a severe correction and remain technically sound.

SOL Price Forecast

The daily chart shows Solana is above the key 50, 100, and 200-day moving averages, which are now considerably below the price. Furthermore, the rally to $83.23 cleared the June high of $48.51 and the previous $61.44 record, set in May.

Notably, a supportive trend line has also formed and is visible around $49.00. Combined with the 50 DMA and the June high, the trend contributes to robust confluent support above $48.00. In my opinion, even if the Solana price drops to this support level, the technical outlook is still bullish.

However, should SOL drop below $48.30, it would signify a serious breakdown in momentum. And on that basis, the positive outlook turns decidedly bearish. Although for now, there are no signs that will materialise.

Solana Price Chart (daily)

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