In recent weeks, Solana (SOL), the 5th largest cryptocurrency on the market, experienced a period of decline, hitting a two-month low of $121 on Friday. The coin’s value struggled to break above the $188 level in May, resulting in a continuous downtrend further exacerbated over the past seven days with the general market’s correction.
However, crypto analyst Jelle has sparked optimism by suggesting the potential for substantial gains for SOL in the coming months, reminiscent of the fabled “Solana Summer” of 2021.
Analyst Draws Parallels To 2021’s “Solana Summer”
Jelle took to social media to share an analysis of SOL’s price action, drawing parallels between its current behavior and the events of the summer of 2021. The analyst noted months of consolidation, characterized by lower highs while maintaining support above the $120 level.
Jelle emphasized that SOL is rebounding from the weekly Relative Strength Index (RSI) midlevel, mirroring the pattern observed in July 2021. Encouraged by these similarities, Jelle boldly believed in Solana’s future, setting a target of $600 for this market cycle.
During the Solana Summer of 2021, the price of SOL more than tripled between July and November. The coin’s market capitalization grew significantly from a pre-summer low of $10 billion to an impressive high of $63 billion by the end of the year, eventually leading the SOL’s price to its current all-time high of $259.
Jelle’s optimistic outlook implies the potential for even greater gains this time. A surge from the current trading price of $141 to $600 would represent a remarkable 352% increase, surpassing the coin’s current value.
Nevertheless, Solana faces immediate resistance just above its current trading price at $143, a formidable barrier that has proven challenging for the token over the past six days.
The subsequent targets are the 200-day Exponential Moving Average (EMA) and the $150 resistance level. The 200-day EMA has served as a crucial support level for the token over the past six months, contributing to its price appreciation in the first quarter of this year, reaching a yearly high of $210 on March 18.
Regaining the 200-day EMA would be imperative for Solana Bulls, as it would position the token to target and surpass its next obstacle at $170.
Market Cap Sees Double-Digit Decline
Delving into key financial metrics to gauge Solana’s blockchain performance and price correlation, Token Terminal data shows that Solana’s fully diluted market capitalization is $80.78 billion. However, this figure represents a decline of 11.9% over the past 30 days.
The circulating market capitalization of Solana, which considers the number of tokens actively trading in the market, currently amounts to $64.54 billion. Like the fully diluted market cap, this metric has experienced an 11.4% decrease in value over the past 30 days, along with SOL’s price.
However, despite the recent market dip, Solana’s token trading volume over the past 30 days has remained relatively stable, with a trading volume of $77.37 billion, indicating continued interest from bullish investors.
Featured image from DALL-E, chart from TradingView.com