Solana price has reversed its direction downwards. Investors began to wonder about the possible reasons behind this decline in the popular cryptocurrency and whether the decline will continue.
Solana reached $18.3 on September 11, 2023, after a 12 percent decline in 4 days, retesting a key uptrend support line. However, there are concerns that this support is part of a downward pattern that could reduce the SOL token to almost zero by 2024.
As seen in the chart below, SOL is traded in a pattern called “ascending triangle”. This triangle contains a flat support-return resistance that has been in effect since 2021 and a lower trend line that has prevented sharp declines since late December 2022.
The pattern may appear after a downtrend, as in the SOL example. If the token confirms the formation and breaks below the support, its target price could be almost zero, implying a decline equal to the maximum triangle height.
However, before the announced draft takes place, Solana price will likely consolidate at support due to decreasing trading volumes. Moreover, Solana’s subsequent price movement largely depends on the Bitcoin price. Because the altcoin has followed the footsteps of BTC since the beginning of the year and exhibited higher volatility with the same trend.
On the other hand, on-chain measurements support the decline prediction. Leading protocols on Solana experienced double-digit losses in total value locked (TVL) in the previous month, in line with the overall downward trend in the crypto sector.
FTX wind supports bearish forecast
Additionally, the altcoin market may face further selling pressure this week, as FTX will receive approval to liquidate its holdings on September 13. The bankrupt crypto exchange reportedly had $3.4 billion in various crypto assets in April, with SOL assets rising to $685 million according to January data.
According to analytics platform Arkham Intelligence, a wallet owned by FTX moved $10 million worth of digital assets from Solana Network to Ethereum in early September. The move sparked concerns that the exchange could be the first in a series of token dumps during bankruptcy proceedings.
Besides that, Michael Novogratz’s Galaxy Finance manages crypto assets, and the higher they can sell SOL and other assets, the more money they make. Therefore, it seems unlikely that Galaxy will short the token and dispose of it cheaply, according to experts.
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