“Ethereum Killer?” How about a shot at SOL in an unnerving market conflict? That’s the state of top crypto Solana (CCC:SOL-USD). Amid its price plunge today, let’s examine if the action offers a last line of defense for buyers against a fierce bear market.
I hate to tell you, but I did warn that the bears weren’t done with SOL. And a hat tip is in order regarding Solana.
In November, and during Solana’s first-stage corrective move, marching orders to refrain from buying Solana were issued on a couple of occasions. And unless you’re a day trader, the warning has proved very prescient.
Since then, Solana has worked its way into a vicious bear market that’s reduced the coin to about one-third of its peak valuation. The massive retraction hasn’t been without cause, either — hence the prior warnings.
The Warning Signs in Solana Last Year
In 2021, Solana was backed by frenzied excitement over SOL’s growing share of the non-fungible token (NFT) market, Ethereum-killing smart contract features and popularity with developers. It surged more than 12,000%, give or take one hundred percent or so, in a year’s time.
More dazzling, the rally created a top crypto worth nearly $81 billion at its peak valuation.
Solana’s largess wasn’t quite as much as Bitcoin (CCC:BTC-USD), which topped $1 trillion. However, it was sufficient to catapult the coin into the top-10 list of digital assets by market cap.
The price action in SOL also wasn’t worth buying into. Not then, not there.
The thing was, even if Solana’s bullish underpinnings were as good as the most ardent SOL investors believed them to be, overly-bullish price momentum all but confirmed a bearish “when” and not “if” scenario was certain to play out.
The good news right now is, that day has since arrived and it is long over.
Why It’s Time to Buy SOL
Despite a vicious 67% sell-off, SOL’s current $30 billion valuation has kept the Ethereum-killing coin among the crypto market’s most-valued –but obviously less dearly-held — digital assets.
Of course, bulls are now more likely to warn today is different for Solana. SOL’s bear market is facing very real inflation and tighter global monetary policy risks.
Cryptos are also challenged by on-the-rise and increasingly hostile regulators, a strengthening greenback and now the very latest — a ramped up conflict between Russia and Ukraine.
Specific to Solana, a couple power outages in the past couple months tied to distributed denial-of-service (DDoS) attacks have given bears something extra to sink their teeth into.
But these bearish things too shall pass — and that day is looking increasingly nearby.
Solana Weekly Price Chart
Source: Charts by TradingView
The current headlines and bearish sentiment in Solana are nearing levels consistent with — and the polar opposite of — the coin’s overly-convinced reasons for being during last year’s monster rally.
And that’s what’s needed for putting a bottom in SOL. So is the price chart. Today and amid Monday’s rough-and-tumble 15% swoon in Solana, a last line of defense against a fierce bear is setting up.
Over the past couple months, a great deal of Fibonacci levels and trendline support have failed during Solana’s bear market.
But a pair of 76% retracement levels tied to key lows in December 2020 and July 2020 are holding oversold price action. That’s taking the shape of a weekly bottoming hammer candlestick.
The Bottom Line on SOL
Among technicians, some see the 76% as a lesser support line. Much of that is tied to the failure of the 62% level, which indicates a full-fledged 100% retracement is in the works.
I’m guessing, though, that they are the same extremists who proffered upside promises of $300 or more in Solana coin back in October and early November.
Bottom-line, Solana isn’t a widows and orphans opportunity. But within a speculative crypto market, a deeper value purchase does exist for investors able to listen to Solana’s chart rather than today’s consensus warnings of what matters most.
On the date of publication, Chris Tyler holds (either directly or indirectly) positions in Grayscale Bitcoin and Ethereum Trusts (GBTC and ETHE). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.