Solana’s recent price action has left traders on edge, with the cryptocurrency struggling to maintain its position in the market. After failing to break above the crucial $139 resistance level, Solana (SOL) has slipped, trading at approximately $138 at the time of writing. This downward trend has heightened concerns among investors, particularly as veteran market analyst Peter Brandt warns of a potential bearish pattern taking shape.
Peter Brandt’s Bearish Outlook
Peter Brandt, a well-respected figure in the trading community, has highlighted a troubling formation on Solana’s price chart. Brandt has pointed out a rectangular consolidation pattern, with support sitting at $129 and resistance near $204. According to his analysis, if SOL breaks below the $129 support level, the measured move from the rectangle suggests a steep decline to as low as $80.
This bearish outlook has added to the growing unease surrounding Solana’s performance. Currently, SOL is hovering below its 8-day simple moving average (SMA) of $133.58, further signaling weakness in short-term price trends. The Relative Strength Index (RSI) is at 42.17, which, while not yet in oversold territory, points to persistent selling pressure. With the RSI below the neutral 50 mark, more room for downside appears likely if the selling momentum continues.
Development Activity Takes a Hit
Adding to the bearish case, Solana’s development activity has seen a noticeable decline. According to data from Santiment’s Development Activity Index, engagement on Solana’s public GitHub repositories has dropped significantly since early September. This reduced activity indicates a potential lack of developer confidence, which could weigh heavily on the ecosystem’s long-term growth prospects.
A thriving developer community is often a positive indicator for blockchain projects, as it suggests continuous innovation and expansion. However, this recent slowdown in Solana’s development could signal stagnation, raising concerns about its future viability in a highly competitive market.
FTX and Alameda Liquidations Continue
Another factor contributing to Solana’s fragile outlook is the ongoing liquidation of SOL holdings by bankrupt firms FTX and Alameda Research. Over the past three months, these entities have unstaked a massive 530,000 SOL, worth approximately $71 million. Their monthly sell-offs have averaged around 176,700 SOL, with one notable redemption involving 177,693 SOL valued at $23.75 million.
Despite these sizable liquidations, FTX and Alameda still control over 7 million SOL, worth nearly $945.7 million. Should these firms continue to liquidate their holdings, Solana’s price could face even more downward pressure, amplifying the already bearish sentiment in the market.
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With a mix of technical indicators pointing to weakness, declining development activity, and the looming threat of further liquidations by FTX and Alameda, Solana’s outlook appears precarious. Traders are increasingly cautious, bracing for the possibility of a deeper sell-off if key support levels fail to hold.
For now, all eyes are on Solana’s $129 support level. A break below this point could pave the way for a sharp decline, possibly to $80, as predicted by Peter Brandt’s analysis. As Solana struggles to regain momentum, investors are left weighing the risks of further downside in the volatile crypto market.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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