VictorCobra

Solana - Back to Double Digits

Short
BINANCE:SOLUSD   Solana / U.S. Dollar
Solana is one of the best performers from the bull market, and was one of the few to actually achieve a 1000x increase. Multiple coins did this in 2017, but very few did this time around, most likely because leverage can now be used in the crypto market. Pumping altcoins by this much doesn't seem worth the risk anymore, considering they often just retrace most of their gains. Futures provide a much easier way for people to gain and lose money in the market. So, when a coin like SOL does extraordinarily well against Bitcoin , it MUST be due to fundamentals, right? The chain itself has stopped functioning more than once. 25% of the supply is held by the founders & team. Another 37% is held by initial investors. That's 62% held by people who got SOL for likely under $1. The remaining 38% was reserved for airdrops and the community. There's a lot of people BIG in profit on SOL. Latecomers probably own a very small portion of the supply. Additionally, NFT's are big on Solana , but I believe NFT's are in a huge bubble anyway.

From a tech perspective, maybe it's better than Ethereum . However, the cyrpto market (over time) often doesn't really care about these things. Even in 2017, some of the best performing coins ( XLM , NANO , XRP) were also some of the biggest losers. Those coins had significant advantages over Bitcoin , but could not compete with the network effect, or the economic incentives of proof-of-work. High fees were chosen over zero fees, and it remains that way to this day. Ethereum fees have remained consistently high throughout the bull market, and I think this makes crypto exclusionary. It shuts out any smaller crypto enthusiasts, and makes the whole NFT thing seem like a big scam - essentially a party for the wealthy where the ticket is your sanity and your small pile of cash.

Anyway, I don't think the market cares about how fast or how low the fees are. Maybe it does momentarily, but the market is driven on hype and profitability. Under capitalism, barriers to entry increase the concentration of wealth at the top. So wealthy investors are incentivized to hold coins that are harder to obtain, and more expensive to use. Basically a status symbol. I think the market will turn on SOL, resulting in a correction at least back to the 50 week MA (red). The same can happen for SOL/ BTC . In the short term, perhaps SOL can have a relief bounce towards the 9 week EMA (near $166). Ultimately, I think it can decline at least 50% from current prices, and perhaps even to test some levels below $60. Potential supports are shown on the chart above. Currently, we don't know how bad things can get for crypto. It's possible things really turn around soon, but I think we'd need a pretty impressive move up from the market to invalidate my bearish bias.

This is not meant as financial advice. I'm posting this really out of curiosity - to see if huge bearish drawdowns continue to occur in the crypto market. I'm curious to see whether Solana can hold up, and last until a new potential cycle.

-Victor Cobra
Comment: Yikes!
Comment: Well, that escalated quickly. Already below the 50 week MA. Perhaps there can be a sort of relief bounce for the market soon, but we haven't seen a huge capitulation wick yet. This is more of a slow capitulation, which has been way more painful for market participants over the last several weeks.
Comment: If SOL can't bounce at the 50 week MA, it can easily head back to $60 and lower.

Related Ideas

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.