Solana price eyes 15% nosedive after recent development in FTX bankruptcy case
- Solana price shows a lack of bullish momentum after rallying nearly 65% in the last month.
- Investors can expect SOL to drop 15% to 20%, depending on the bearish pressure.
- A daily candlestick close above $22.15 that flips it into a support floor will invalidate the bullish thesis.
Solana price has been on an uptrend for nearly a month, clocking in nearly 65% in gains. While the ascent is impressive, SOL holders need to be aware of a sudden shift in trend due to declining momentum. Additionally, the FTX bankruptcy case has new development that requires the now-defunct crypto exchange to pay up to $325 million to its European creditors.
Read more on FTX: FTX lawyers to claw back $323.5 million spent on FTX Europe acquisition, fueling hope of payback for creditors
Solana price ready to dive lower
Solana price kick-started its ascent on June 14 and set up a local top at $23.05 after rallying 65% in less than a month. This expansive move seems to be running on fumes now as sell signals emerge while SOL trades at $21.72.
The Wave Trend indicator has flashed a sell signal in the overbought region, suggesting that Solana price is due for a trend reversal. Additionally, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) have also developed a bearish divergence, forecasting a bearish move in the near future.
A bearish divergence is when the asset produces higher highs as the momentum indicator sets up lower highs, suggesting a decline in bullish pressure. As a result, the setup resolves by triggering a correction for the underlying asset.
In the case of SOL, Solana price will first encounter the $19.66 support level after a 9.5% move. Following this, the altcoin will retest the midpoint of the 65% move at $18.51. This move would constitute a 15% downswing.
If bears are still in control and bulls fail to make a comeback, Solana price could tag the next stable support floor at $17.19. This move would constitute a 20% loss for SOL holders from the current position.
SOL/USDT 12-hour chart
While the retracement outlook detailed above makes logical sense, investors need to keep a close eye on Bitcoin (BTC) price. A sudden spike in the pioneer crypto could trigger a rally for altcoins, including SOL.
In such a case, if Solana price produces a daily candlestick close above the $22.15 hurdle and flips it into a support floor, it will invalidate the bullish thesis. Such a development could attract sidelined buyers and push SOL higher.
In this scenario, market participants can expect Solana price to kick-start a 27% ascent and tag the $27.59 hurdle.
Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
