Solana Price Close to 40% Drop in June

Network outages and diminishing smart contract reserves exert further downward pressure on the Solana (SOL) price. As the present “descending triangle” pattern nears its apex, the price of Solana (SOL) is approaching a critical crossroads.

SOL’s 40 percent price drop setup

In addition, the price of SOL has stabilized within the range denoted by a falling trend-line resistance and horizontal trend-line support, producing a descending triangle that signals a continuation of the trend.

SOL is more likely to break below the triangle area because of its negative trend, which is down 85 percent from its November 2021 high of $267.

In general, the formation of a descending triangle following a breakdown move may continue until the price falls by the maximum height of the triangle. As a result, SOL’s gloomy price target for June could be as low as $22.50, which represents a decrease of almost 40 percent from the closing price on June 10.

According to research conducted by Samurai Trading Academy, not all falling triangles lead to breakdowns. A descending triangle configuration has a seven out of ten chance of reaching its profit target based on the pattern’s historical performance.

SOL has approximately a 30% probability of avoiding a breakdown and bouncing back.

Solana’s return strategy

The bottom of the asset’s negative cycle is characterized by a descending triangle that appears during a price decline but still leads to a price reversal.

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Assume SOL remains above the triangle’s horizontal trendline support. When the SOL/USD pair breaches the structure’s falling trend-line resistance, it may soar to its maximum height, with a $65, or 72 percent, increase from the price on June 10.

The 50-day exponential moving average (50-day EMA; red wave) of SOL coincides with the bullish profit goal of the descending triangle.

In addition, starting May 12, the daily relative strength index (RSI) for SOL has reversed from its oversold threshold of 30, indicating the coin is on the mend.

Since its height, Solana TVL has decreased by around 75%.

Solana’s basics are mixed. In recent months, it had performed poorly as a blockchain network due to frequent outages. According to Defi Llama statistics, the total value locked (TVL) under Solana’s smart contracts has decreased to $3.69 billion, a decline of 75 percent from its peak of $14.83 billion in December 2021.

According to a report issued by James Trautman, a researcher at the U.S.-based crypto analytics company Messari, Solana’s network traffic, developer activity, network infrastructure, and general ecosystem all increased steadily in the first quarter of 2022.

An extract reads:

“SEVERAL FACTORS CONTRIBUTED TO THE Q1 RESULTS, INCLUDING THE CONTINUED GROWTH OF NEW NFTS AND NFT MARKETS, DIVERSIFICATION OF TVL, IMPROVEMENTS IN UX AND NEW APPLICATIONS ACROSS SEVERAL SECTORS OUTSIDE OF DEFI.”

Solana’s venture capital arm announced earlier this month a $100 million investment and grant fund to support the development of blockchain-based software in South Korea, a country whose cryptocurrency sector has recently been impacted by the collapse of Terra (originally LUNA, a $40 billion “algorithmic stablecoin” project).

The decision will tempt developers who wish to relocate their projects from Terra to Solana, with the potential of boosting the demand for SOL.

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