Solana [SOL], the cryptocurrency ranking fifth in terms of market capitalization, has experienced significant fluctuations in the year 2024. Following a period of steady growth in 2023, this self-proclaimed ETH competitor has struggled to sustain its upward trajectory in the current year.
This change in market sentiment has resulted in a 40% drop in the altcoin’s price from its all-time high of $209 reached in March.
As of the time of writing, SOL was being traded at $130.13, marking a 5.95% decrease over the past week. This persistent decline reflects a growing sense of uncertainty among investors.
Nevertheless, despite this downward trend, analysts such as Ali Martinez anticipate an imminent recovery.
What is the prevailing market sentiment?
According to the well-known crypto analyst, SOL could be poised for an upward trend based on its historical cycles. Martinez pointed out that the TD sequential indicator had signaled a significant buy opportunity on SOL’s daily charts. He also referred to the three previous cycles leading up to Solana’s Breakpoint, noting a price surge in each cycle from 2021 to 2023.
Martinez’s insights suggest,
“Historically, approximately two weeks before the #Solana Breakpoint event, $SOL tends to experience a price upswing. In 2021, it rose by 35%, in 2022 by another 35%, and in 2023 by 60%. Currently, we are 16 days away from the 2024 #SOL Breakpoint event.”
Based on this analysis, SOL’s price may soon embark on an upward trajectory.
Moreover, the TD sequential indicator has indicated the conclusion of a specific trend based on market dynamics. In essence, this indicator is likely to generate a buy signal soon, signaling a potential reversal towards an upward trend after a period of decline.
What do the charts indicate?
While insights drawn from previous cycles provide compelling arguments, what do SOL’s charts reveal?
To commence, Solana’s aggregated funding rate across exchanges has stayed positive over the past three days. Despite the price decrease during this period, investors have exhibited confidence in the altcoin’s future direction.
Consequently, long positions are offering payment to short positions to maintain their stance. This indicates that traders may be anticipating price increases and are therefore willing to pay a premium for their positions, signaling a bullish outlook.
Furthermore, the Open Interest per exchange has surged by 7.59% in the previous week, rising from $614 million to $661 million. This surge signifies increased buying activity as investors open new positions or retain existing ones, reflecting another positive market sentiment.
Lastly, between the 3rd and 6th of September 2024, the OI-weighted funding rate has consistently remained positive, indicating a rising demand for long positions. This scenario underscores investor confidence in the altcoin.
Therefore, if Martinez’s analysis proves accurate, combined with the favorable market sentiment, SOL could potentially witness a short-term rally towards $142.