Solana Q4 Technical Analysis: Will SOL Price Keep Falling?

Key Takeaways:

• Technicals predict a drop to near-zero if SOL slides below a key support.
• The weekly chart confirms the bearish fears.
• Dependency on Bitcoin and the potential FTX liquidation back the prognosis.

YEREVAN (CoinChapter.com) — Solana token SOL dropped 8% since Oct 1 and reached $22.8 in the New York hours of Oct 4, partially paring its 32% rally Sep 27-30. Technicals on daily and weekly charts and macroeconomic conditions testify to a bearish continuation for Solana in Q4.

Rising triangle threatens to take SOL to zero.

CoinChapter reported previously that SOL had been charting within a technical pattern dubbed the “rising triangle.” It features a flat support-turned-resistance that has been relevant since 2021 and a lower trendline that has prevented sharp drops since late December 2022.

If the Solana token confirms the pattern and breaks below the support, its target price could be practically zero, a drop equal to the maximal triangle height.

As of early October, the price action retested the mid-range of the triangle (dashed line) as resistance and headed for a potential 20% drop toward $18.6, the triangle’s lower trendline.

The weekly chart also demonstrated a bearish forecast for Q4, as the coin recoiled from the 50-week exponential moving average (50-week EMA; orange wave), a height SOL cannot conquer since April 2022.

Moreover, Solana’s subsequent price action highly depends on the Bitcoin price, and the correlation has been rising since mid-September (blue wave at the bottom of the daily chart).

Macro factors in Solana’s way

The altcoin has mostly followed the alpha crypto’s footsteps year-to-date, exhibiting higher volatility with the same bias. Thus, macroeconomic conditions that hinder Bitcoin’s upside attempts will likely influence Solana by proxy.

The persistently climbing Treasury yields and piling debt could dampen the crypto market’s chances for a convincing rally in Q4.

Surprisingly, Bitcoin has exhibited a positive correlation with US Bonds in 2023 and the lowest 30-day correlation with the US stock index Nasdaq-100 since May. Тhus, BTC might rise against underperforming stocks in the short term, but such behavior is not typical for the long haul. If a Bitcoin crash follows in Q4, Solana is unlikely to pull a solo surge.

FTX liquidation ahead

Solana and the broader altcoin market could face more selling pressure as FTX got approval to liquidate its assets on Sep 13. The bankrupt crypto exchange reportedly had $3.4 billion in various crypto assets, and SOL holdings topped the pile at $1.16 billion.

According to the analytical platform Arkham Intelligence, an FTX wallet moved $10 million worth of digital assets from the Solana Network to Ethereum in early September. The move sparked concerns it could be the first in a series of token dumps amid the exchange’s bankruptcy proceedings. 

FTX reportedly aims to avoid advance public notice of transactions to prevent market disruption. Selling massive amounts of assets can influence crypto prices significantly. However, even a slow sale of $1.16 billion worth of SOL might cast a shadow on the coin.