Solana Analysis: Fears of a Return to $20 Mounts as Bullish Trend Reached Its Peak

Solana price action over the last three days is nothing short of volatility. However, the coin experienced a notable decrease in price during this period.

This comes after almost seven days of uptrends. As at the time of writing, the altcoin is on its fourth day of consistent losses. As a result, fears of a massive downtrend are fresh on traders’ minds.

The chart above shows a bearish pattern that came as a result of the previous increases in value. Aside from price movements, there are other factors that may play out against the asset. Let’s go over them

Solana Fundamentals

While speaking to Ran Neuner on the Crypto Banter YouTube channel, Solana co-founder, Sandeep Nailwal made several comments that many perceive as bearish.

He stated that Ethereum would emerge as the dominant smart contract with other layer-1 protocols falling out or folding. He added that the possible cause for this will be because all users’ activities are on ETH’s layer-2 with no usage on layer one.

The host asked Nailwal to make a “big statement” and asked if projects like Solana, Aptos, Avalanche, and Cardano would one day vanish. He added that neither of the aforementioned protocols nor their related layer 2s have shown any real traction. He then proclaimed that Ethereum was the only chain capable of competing.

As at the time of writing, this news is gradually gaining traction and may influence traders’ sentiment. Let’s see another factor

Indicators are Bearish

The first indicator to examine is the Relative Strength Index. A few days back, it was 60. As a result of the three-day downtrend, it is at 53; indicating a gradual increase in selling pressure.

The other metric is the Moving Average Convergence Divergence. As at the time of writing, both the 12-day EMA and 26-day EMA are both in contact. A bearish divergence is imminent which signifies the asset entering stiffer price decreases.

On the other hand, the Moving Averages are also experiencing volatility. We may see both the 50-day MA and 200-day MA intercept in what many call a golden cross.