Solana (SOL) declined slightly on July 20 after testing critical technical resistance, pointing to further pullbacks in the coming weeks.

SOL price can be destroyed by 50%

- Advertisement -

The price of SOL is down more than 4% to $44 after failing to clear multi-week uptrend line resistance. Interestingly, this resistance level is part of a bearish continuation pattern dubbed the “bear flag”.

- Advertisement -

The previous test of the same resistance line at the end of June preceded the price drop by more than 30%, indicating higher sentiment among SOL traders near the level. Therefore, the last retracement from the same range could result in an extended retracement down.

Daily SOL/USD price chart. Source: Trading View
- Advertisement -

Meanwhile, the lower bear flag trendline is holding back sharp SOL pullbacks. As a result, an extended correction scenario for SOL could see its price reach the support level, which is currently around $35.40, 20% below current price levels.

In addition, a decisive close below the lower trendline can trigger a bear flag breakout setup, in which the price drops to the height of the downtrend (called the “flagpole”) that preceded the flag’s formation.

SOL/USD daily chart with a bear flag breakout scenario. Source: Trading View

This puts SOL on track to levels near $21 by September, more than 50% below today’s price.

What experts say about Solana

The bear flag setting comes after SOL prices have risen more than 80% since June 14, mainly due to a similar recovery in the cryptocurrency market.

For example, Ether (ETH), Solana’s main competitor in smart contracts, is up over 85% in more than a month after falling to $880 locally. Similarly, Bitcoin (BTC) is up 35% over the same period.

Daily correlation coefficient of SOL/USD and BTC/USD at 0.97. Source: Trading View

Independent Market Analyst Altcoin Sherpa sees The price of SOL will rise to $60-$80 in 2022 if bitcoin continues to rise.

On the contrary, Andrei Diacono, CCO of Choise, notes that demand for SOL may fall due to Ethereum’s switch to Proof-of-Stake in September.

“The new Ethereum protocol has the same benefits as Solana and investors may choose to stick with Ethereum if the issues with high gas fees and scalability are resolved,” Diyacono explained.

3 reasons why Solana could repeat the 2018 Ethereum fractal with a 5000% gain

Pavel Laskarzewski, co-CEO of Synapse Network, fears that SOL’s ongoing price rally could be a bull trap, noting that SOL, along with the rest of the crypto market, is still facing macro headwinds driven by higher inflation and rising lending rates. .

He said:

“We may see a slight increase in Solana prices, but due to the current state of the market, I do not expect a big change.”

Solana funds to add $110.8M in 2022

Meanwhile, institutional interest in Solana still looks better than Ethereum, according to CoinShares. latest weekly report.

Net flows to crypto funds in 2022 (by assets). Source: CoinShares

It is noteworthy that since the beginning of this year, funds supported by Solana have attracted $110.8 million to their treasury. By comparison, Ethereum-based investment vehicles recorded $446.1 million in withdrawals from their reserves over the same period, including $2.5 million in the week ending July 15.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cryptooshala.com. Every investment and trading step involves risk, you should do your own research when making a decision.