In recent weeks, Solana (SOL), the 5th largest cryptocurrency in the market, has been on a downward trend, hitting a two-month low of $121 on Friday. The coin’s value struggled to break above the $188 level in May, resulting in a continued downtrend further aggravated in the last seven days with the correction of the general market.
However, crypto analyst Jelle sparked optimism by suggesting the potential for substantial gains for SOL in the coming months, reminiscent of the legendary “Solana Summer” of 2021.
Analyst draws parallels with 2021’s “Solana summer”
Jelle took to social media to share a analysis of SOL’s price action, drawing parallels between its current behavior and the events of summer 2021. The analyst noted months of consolidation, characterized by lower highs, while holding support above the $120 level.
Jelle emphasized that SOL is bouncing off the weekly average level of the Relative Strength Index (RSI), mirroring the pattern seen in July 2021. Encouraged by these similarities, Jelle boldly believed in Solana’s future, setting a target of $600 for this market cycle.
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During the Solana summer of 2021, the price of SOL more than tripled between July and November. The coin’s market cap grew significantly from a pre-summer low of $10 billion to an impressive high of $63 billion by the end of the year, eventually taking the price of SOL to its current high all-time high from $259.
Jelle’s optimistic outlook implies the potential for even greater gains this time around. An increase from the current trading price of $141 to $600 would represent a notable 352% increase, surpassing the coin’s current value.
However, Solana faces immediate resistance just above its current trading price of $143, a formidable barrier that has proven challenging for the token over the past six days.
Subsequent targets are the 200-day exponential moving average (EMA) and the $150 resistance level. 200-day EMA has served as a crucial support level for the token over the past six months, contributing to its price appreciation in the first quarter of this year, reaching a yearly high of $210 on March 18.
Reclaiming the 200-day EMA would be crucial for Solana Bulls as it would position the token towards the target and clear its next hurdle at $170.
Market capitalization sees double-digit decline
Investigating key financial metrics to assess Solana blockchain performance and price correlation, Token Terminal data shows that Solana’s fully diluted market cap is $80.78 billion. However, this figure represents a drop of 11.9% over the past 30 days.
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Solana’s circulating market cap, which considers the number of tokens actively traded on the market, currently stands at $64.54 billion. Like the fully diluted market cap, this metric has seen an 11.4% drop in value over the past 30 days, along with the price of SOL.
However, despite the recent market crash, the Solana token volume of business over the past 30 days has remained relatively stable, with a trading volume of $77.37 billion, indicating continued interest from bullish investors.
Featured image of DALL-E, chart from TradingView.com