Veteran analyst Peter Brandt warns of a bearish trend that could reach levels below $100.
The recent price movement on Solana has put traders in a difficult position. SOL failed to break above the $139 level, which led to a drop in value and a short-term rise in quotes. Currently trading around $138. Solana is showing signs of weakness, making investors nervous about further losses.
The bearish outlook is further highlighted by technical analysis, market indicators and external factors affecting the performance of the cryptocurrency.
Risk of further deterioration
Market veteran Peter Brandt pointed out the formation of a bearish pattern on the Solana price chart. Brandt highlights a large rectangular consolidation with some support near $129 and resistance near $204.
If the current support level fails, the pattern could complete, suggesting a potential fall towards the $80 range. This will reflect the downside risk based on the measured movement of the rectangle.
Observation on $SOL
In the support zone. If support gives way, the large rectangle will end and point to $80 and change pic.twitter.com/66L6We7ewZ— Peter Brandt (@PeterLBrandt) September 18, 2024
Confirming this bearish outlook, the 8-day simple moving average (SMA) is currently hovering around $133.58, above current price levels. This indicates that Solana is facing resistance from the short-term averages, adding to the downside momentum.
Additionally, the Relative Strength Index (RSI) is at 42.17, below the neutral 50 mark, highlighting bearish sentiment but falling short of oversold conditions. This value indicates prevailing selling pressure with the possibility of further declines if sales continue.
Sentiment on development activity is bearish
Solana’s bearish momentum is also reflected in its development activity, with the Santiments Development Activity Index. showing a consistent decline from the beginning of September. This trend suggests a decline in project-related activity on the Solana public GitHub repository, reflecting a decline in developer engagement.
The decline in development activity signals weakening confidence in Solana’s blockchain projects, which could further dampen investor sentiment and contribute to the negative market outlook.
Bearish sentiment around Solana deepens ongoing sales from the bankrupt FTX and Alameda group. Over the past three months, these organizations have cleared 530,000 SOLs worth approximately $71 million, redistributing them to multiple locations.
It is noteworthy that the recent transfer transaction averaged 176,700 soles per month, including the redemption of 177,693 soles amounting to US$23.75 million. Despite these moves, FTX and Alameda still own a significant amount of Solana shares: 7.06 million SOL worth $945.7 million, which could potentially put further downward pressure on the market.
