Up Or Down? What To Expect From Solana (SOL) In The Homestretch Of 2022

Posted on December 7, 2022
News
By Mark Otto
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Solana is among the hardest hit by the demise of FTX, as the two companies have collaborated to establish Serum, a decentralized derivatives market. This led to Solana being closely associated with the Sam Bankman-Fried crypto exchange, with more than $900 million worth of SOL being held by FTX. Let’s have a quick overview: The company’s fundamentals are strong, therefore it should be able to start making money again soon. Constant pressure from technicals and bearish market circumst[...]

Solana is among the hardest hit by the demise of FTX, as the two companies have collaborated to establish Serum, a decentralized derivatives market.

This led to Solana being closely associated with the Sam Bankman-Fried crypto exchange, with more than $900 million worth of SOL being held by FTX.

Let’s have a quick overview:

The company’s fundamentals are strong, therefore it should be able to start making money again soon.
Constant pressure from technicals and bearish market circumstances keeps the price low.

Metrics, though, suggest SOL is making progress in its recovery from the catastrophe. Founder and CEO of the IBC Group Mario Nawfal has stated that the token’s fundamentals are “strong,” noting the token’s development growth, a healthy NFT marketspace, and a relatively high daily transaction volume compared to other L1 chains as evidence.

With SOL registering an increase in the weekly and bi-weekly timescales, is the token really recovering?

SOL’s Fortunes Have Yet To Improve

Despite Nawfal’s assertions, the data shows that token and ecosystem indicators are not looking well.

Messari data indicates that the asset’s volatility is at an all-time high of 2.00, suggesting that the asset is more likely to move during this period, whether bullish or bearish.

Sharpe’s ratio, which currently stands at -3.73, indicates a pessimistic near-term outlook. This indicates that SOL’s returns in relation to its volatility are close to or equal to zero.

With a rising triangle, SOL technicals continue to support the bearish trend.

The RSI is overbought on the 4-hour time frame, which drives the signal towards a bearish crossover. The MFI confirms the bearishness of SOL as it declines in tandem with the price. At the time of writing, SOL is trading at $13.836 with a red candle.

At of time of publication, the top and lower halves of the Bollinger band was $14.3602 and $13.3052. It also places SOL in a risky position, as a crunch zone appears to be building.

Too much FUD around Solana. The fundamentals look solid:

Dev growth second to ETH NFT volume surprisingly healthy FTX collapse makes SOL MORE decentralized Nakamoto Coefficient SOL daily transactions higher than all other L1s

Am I missing something?

— Mario Nawfal (@MarioNawfal) November 27, 2022

SOL And FUD

Even with excellent fundamentals, the EMA ribbon is in the midst of a bearish crossover, making recovery tough for SOL bulls.

Solana struggles to deal with the fear, uncertainty, and doubt around its ecosystem and SOL coin. For a recovery to even be a chance, maintaining support at $13,0769 is beneficial.

With a CMF of -0.07 and a bearish cross on the MACD, the price of SOL should decline to $13.0769 or below.