Decentralized finance (DeFi) cryptocurrency Solana (SOL) has attracted investor enthusiasm in recent weeks, rising alongside the general market sentiment.
Indeed, the token has surpassed the $170 mark for the first time since January 2022 as investors anticipate a new all-time high.
However, amid the bullish sentiments, crypto analyst Ali Martinez observed in an X (formerly Twitter) post on March 14 that technical indicators suggest that the token might face a ‘sell signal.’ The analyst noted that Solana presented the TD Sequential indicator, signaling a possible downturn in its price.
Since December 2023, Martinez noted that whenever this indicator flashed, it hinted at selling. He pointed out that SOL’s price experienced significant drops ranging from 17% to 28%.
“Since December 2023, every time this indicator suggested selling, the price of SOL dropped by 17% to 28%. A similar outlook could see SOL retrace to $152 or even $127,” he said.
The TD (Tom Demark) Sequential is a trading tool designed to identify the exact time of trend exhaustion and price reversal.
Why SOL is rallying
SOL’s rally has seen the token emerge as the fourth-largest cryptocurrency by market capitalization besides stablecoins amid rising investor interest. At some point, this interest saw Binance intermittently suspend withdrawals to the Solana network due to an “increased volume of transactions.”
Various factors, including the rise of Shiba Inu (SHIB), dog-themed tokens such as Bonk (BONK), and the growing popularity of projects on the Solana blockchain, have fueled this bullish momentum.
Furthermore, the integration of Solana’s Web3 smartphone Saga has attracted attention, particularly after users discovered they could redeem millions of tokens worth substantial amounts on the device.
At the same time, the network has seen heightened activity from various sources. For example, Stablecoin issuer Circle is boosting liquidity on Solana with the upcoming introduction of its Cross-Chain Transfer Protocol (CCTP). This strategic initiative enables Circle to create and sustain a USDC balance on Solana.
Indeed, this interest continues to make a case for Solana as a potential ‘Ethereum (ETH) killer.’ Although Ethereum has the first mover advantage, Solana has potential formidable cases, considering it is faster and more cost-efficient.
SOL price analysis
Solana price today was trading at $172, with weekly gains of 23% at press time. Over the last 24 hours, SOL has been up 11%.
Besides the technical indicators, Solana is also facing lingering concerns regarding the sustainability of its recent gains. The ongoing doubts surrounding the security and resilience of its blockchain infrastructure are of particular concern.
For instance, Solana experienced a significant outage in early February, abruptly halting its blockchain operations. Interestingly, such network outages have been a recurring pattern for Solana over the past two years.
While Solana achieved a record for network uptime last year, investors question whether its downtime issues have been adequately addressed.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
