Outstanding cryptocurrency analyst Gert van Lagen has supplied a really bearish outlook for Solana (SOL) in his technical evaluation, suggesting that its value could also be on the verge of a major decline. Van Lagen’s evaluation relies on the Elliott Wave Principle, a broadly revered methodology that seeks to establish recurring patterns and cycles in market value fluctuations.
Why Solana costs might crash
The core of Van Lagen is analysis Right here is an evaluation of Solana’s value motion over the previous few years. In line with his evaluation, 2021 marked the fruits of a transparent Elliott Wave pattern for Solana, marking the tip of a bullish cycle. This uptrend is characterised by a selected sample of 5 waves, with the final wave appearing as a climax transfer earlier than a reversal.
As we enter 2022, Van Lagen’s evaluation has recognized an ongoing decline in wave A, which he categorizes as the primary stage of a secular bear market. Importantly, this decline in wave A reveals a transparent sample of 5 sub-waves, in step with the rules of Elliott Wave Principle. The presence of those sub-waves is a key indicator that the downtrend is more likely to proceed, as they’re believed to replicate the underlying sentiment and psychology of the market.
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In 2023, Van Lagen noticed the formation of wave B, a corrective rally within the context of a broader bear market. Like wave A, this wave B is made up of 5 sub-waves and conforms to the Elliott Wave sample of a corrective transfer. Figuring out this wave B is essential as a result of it means that the general downtrend has not but fully dissipated and additional downward momentum could also be on the best way.
Because the evaluation strikes into 2024, van Lagen expects wave C to materialize. Within the Elliott Wave framework, wave C is the ultimate stage of a broader bear market cycle, and its prevalence might sign the completion of Solana’s ongoing downtrend.
Notably, van Lagen’s evaluation additionally highlighted the presence of a bearish divergence within the weekly Relative Power Index (RSI), a broadly used momentum oscillator. Bearish divergences happen when costs make new highs however the RSI fails to substantiate these highs and may sign an upcoming pattern reversal or lack of bullish momentum.
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Van Lagen posted by way of X: “Shorting SOL -> making ready for the subsequent drop. 2021: Confirmed clear Elliott wave up. 2022: Secular bear market A wave down <- 5 sub waves. 2023: Secular bear market B wave down <- 3 sub waves. 2024: Prediction is C wave down. We're seeing a bearish divergence on the weekly RSI."
Notably, the analyst kept away from specifying a exact value goal, however the blue arrow on the chart means that van Lagen expects the SOL value to plummet to round $13. Such a drop would symbolize a dramatic value crash of over 90% from present value ranges.
There’s a 50% likelihood that this can occur
In his feedback, Van Lagen acknowledged the dangers concerned together with his brief place in Solana, describing it as a “50/50 commerce” and “daring.” Nevertheless, he defended his choice, saying it was backed by a “good theoretical framework” and acted as a hedge towards lengthy positions in different belongings. The analyst harassed the significance of analyzing charts in isolation, with out being influenced by feelings, and emphasised the necessity for objectivity in technical evaluation.
“Shorting SOL is a 50/50 commerce, it is daring but it surely’s additionally a hedge towards my lengthy place. Trying on the particular person charts, with out emotion, there are good causes to do it. It is a dangerous commerce and I am conscious of that, but it surely’s backed by a great theoretical framework,” he mentioned. stated.
Whereas van Lagen’s evaluation paints a bearish outlook for Solana based mostly on Elliott Wave Principle, it is necessary to acknowledge that the broader cryptocurrency market typically strikes in tandem with Bitcoin. This correlation has raised questions amongst different market individuals. One consumer summed up the sentiment by commenting, “That is actually bizarre. I believe BTC will go up within the subsequent few weeks, however I believe SOL will go down? It stays a market construction the place huge cash do not fall as a lot whereas Bitcoin is rising.”
On the time of writing, SOL is buying and selling at $165.
Featured picture created by DALL·E and charts taken from TradingView.com
