Crypto assets went on a massive run higher over the past month, with Solana outperforming the rest of the major tokens.
But it looks like the space is taking a dip today, begging the question of whether or not this is a short-term top or a big reversal is ahead for SOL?
Short-term Top or Reversal Ahead on Solana?
Back in June, we discussed how the fundamentals of the Solana project made for a strong longer-term buying opportunity as SOL/USD was forming a bottom around the $30 – $40 range. Following that discussion, SOL/USD proceeded to continue to base in that range until August, where it finally broke above the $40 handle and shot like a rocket to the moon into September.
On the four hour chart above, we can see that after the initial break, there was another consolidation period around the $70 handle in mid-August before another rally higher, with very little dips along the way to eventually topping out today just under the $200 handle.
Probably the main arguments for the swift rise in price is the overall boom in interest in the crypto space, especially in NFT’s and Decentralized Finance (DeFi) applications. It’s also arguable that the insanely high transaction fees of the current top smart contract platform, the Ethereum network, may be driving speculation that the Solana network could become a serious contender to attract more capital and projects.
But today, we’re seeing a pretty potent dip in the crypto space, with the only major news of note is bitcoin becoming legal tender in El Salvador. This dip could be a “buy-the-rumor, sell-the-news” scenario playing out for bitcoin, which we all know tends to drag the rest of the crypto space with it when it moves.
This has already pulled SOL/USD down to as low as $135 on the session, but now trading around the $174 at the time of this writing. The question now is whether or not this is a buying opportunity or a big reversal in the works. Overall, the fundamentals (e.g., potentially taking market share from Ethereum, continued institutional investment, growing ecosystem, etc.) still point to good odds of longer-term appreciation in SOL. This dip may be a buying opportunity, but given the daily ATR of around $17, SOL/USD could continue to whip around a $30 – $40 range per day until volatility subsides.
We’ll be watching the area around the broken swing ‘highs’ and and rising ‘lows’ pattern for support to form over the next few sessions before considering a long biased position in SOL/USD. If that area breaks, then a retest of the $100 handle is not out of the question, and the next area to watch for potential support patterns to form if the bull argument still holds.
What do you all think? Is the bull run now over for Solana or is this a buying the dip opportunity? Let me know in the comments section below!