SOLANA GETTING READY TO CONTINUE ITS UPTREND
Solana Network's native token (SOL/USD) had seemed to have already dealt with the selling pressure, which lasted for roughly a week following its largest event of the year called Breakpoint (in Lisbon 7-10th of November) before its price had to face another challenge – this time in the form of a fairly deep cryptocurrency market correction, which has started on the 15th of November and caused crypto investor sentiment to flip from exuberance to fear as of today (42/100).
The aforementioned selling pressure, which appeared precisely on an opening day of the conference actually constitues a textbook example of what a ''buy the rumour, sell the news'' type of a situation looks like and, by the way, we did make a point of warning our readers in our most recent article on the asset that it was rather likely to happen. The short-term pullback wasn't as bad as it often is with other coins or assets in traditional markets with a mere 12% loss in value especially when you compare this figure with how much Solana had grown during a run-up to the event, which was approximately a whooping 67% increase over a period of 17 days.
In dollar terms the token appreciated by $105 per unit and that represented another textbook example, this time of a price reaching its expected target following an 'escape' from a symmetrical triangle (in yellow) – all market traders will know that a destination of price action is derived from the height ($110 in this case) of the pattern and projected from tip of pattern. As a result of that perfect behaviour SOL managed to set its current ATH @ $260 but has declined since and presently is trading @ $216 (still 5th largest crypto with a market cap at $66B).
SOME IMPORTANT METRICS TO BEAR IN MIND
Before we move on to our regular TA let's briefly focus on some other important numbers that in the long term should be fundamentally more meaningful than just the current price action, which admittedly has been stealing the majority of investors' attention. First of all, we rarely see Solana's inflation rate being discussed and in our opinion it could be one of a few drawbacks to the asset. So, SOL's initial inflation was, according to solana.com, at 8% annually, which is fairly high relative to other crypto, but fortunately it will gradually decrease by 15% year-to-year to eventually reach a long-term fixed rate of 1.5% per annum (roughly at 7% as of today).
Not ideal, but not a huge red flag either especially for those that have invested or are going to over the long run. In terms of the hottest crypto trend of 2021 so far – NFTs, Solana is presently the fourth most popular blockchain as far as non-fungible token sales volume. That bodes well for the future of this asset particularly when we understand that a metaverse trend, which is heavily dependant on NFTs, is likely to become the main rage in crypto for years to come.
And one last metric that we ought to talk about in this piece (more metrics soon) is Wealth Distribution since we often hear criticism that the token is too centralized so here are some numbers (Total Circulating Supply @ 304M tokens):
- top10 wealthiest SOL addresses hold nearly 55M SOL (10.7% of all supply)
- addresses ranked 11th-50th hold 79M SOL (15.5% of all supply)
- addresses ranked 51st-100th also hold 79M SOL (15.5% also which is a bit strange btw)
- the rest of tokens are either held by addresses ranked 101st and below or not yet in circulation
So, the TOP100 addresses own 41.6% of all supply and a staggering 70% of the circulating supply. Now this in itself is a serious red flag that has to be considered due to a potential danger in Solana whales dumping their holdings on exchanges. Most of these whales must be institutions and venture capitalists, and while we all love the state-of-the-art technology that the blockchain offers, we aren't here to pull the wool over our readers' eyes but to describe the facts. The asset is in fact extremely heavily centralized and that's just the way it is, so any smart investor needs to take it into consideration.
Moving on to the last part – the TA and we instantly notice in the chart that the $216 mark is the most significant level at the moment having been set in September as the current ATH at that time. That price level has been bounced off multiple times over the recent month and also acted as SOL's reliable support in the last four days when the rest of cryptomarket was mostly bleeding. The price is consolidating but the coin has been in a clear long-term uptrend, way above the 100 and 200-day MAs with the 50-day MA ready to support the price action as it already did twice this month alone: on the 18th and the 19th.
SOL established the present ATH of $260 a day before the conference so that was an ultimate higher high, although it's been setting some fairly clear lower highs since so breaking out of that short-term little downtrend is going to be crucial in order to keep the longer-time momentum going. There might be a bit of a resistance at $240 and slightly above but once Solana breaks that and provided that the cryptomarket doesn't keep falling farther then in our opinion the new ATH should only be a matter of time. Worst case scenario – we will be revisiting the $186 area for some possible Black Week shopping.
A week ago RSI on the daily chart hit the lowest reading since July and has bounced off it nicely so we finally might see Solana resume its impressive rally to the upside soon.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.