Crypto Trader Issues Warning About Solana Sell-Off, Anticipates a Prolonged Process for SOL Bottom Formation

A Prominent Crypto Strategist Suggests That Despite Last Week's Surge, Solana (SOL) Continues to Experience a Downtrend

Altcoin Sherpa, a pseudonymous analyst with a substantial following of 196,300 on a major social media platform, has alerted followers to a critical resistance level for Solana, situated around $19.50.

The analyst has highlighted a consistent bearish trend in Solana's price action, with the cryptocurrency forming lower highs since its peak of $32.30 in July 2023. This pattern of lower highs is raising concerns among traders.

Altcoin Sherpa advises caution regarding the current uptrend in Solana's price, emphasizing that recent rallies have resulted in lower highs. However, the analyst also suggests that for long-term investors, accumulating Solana at sub-$20 levels could be a favorable strategy.

Source: Altcoin Sherpa/X

As of the current moment, SOL is trading at $19.04, reflecting a notable 8% increase from its recent seven-day low of $17.57.

Altcoin Sherpa suggests that in the event of a potential downturn in SOL's recent rally, the $14 level could serve as a critical support level. However, he cautions that SOL's ability to maintain levels above $14 hinges on the handling of the massive Solana holdings, valued at $1.16 billion, by the bankrupt crypto exchange FTX.

The analyst anticipates that the process of SOL forming a bottom might be a protracted one. Uncertainty also looms regarding whether the impact of FTX's actions is fully reflected in the current market dynamics. The coming months will be closely watched to observe how the price responds to the substantial supply in the market.

Source: Altcoin Sherpa/X

While Altcoin Sherpa raises concerns about the substantial Solana holdings held by FTX, investor Chris Burniske, who has a following of 263,400 on a prominent social media platform, offers a contrasting perspective. Burniske suggests that merely a small fraction of the defunct crypto exchange's SOL holdings is currently liquid.

He asserts, "Only approximately 13% of FTX's SOL holdings are in liquid form." This insight provides an alternative viewpoint on the availability and potential impact of FTX's Solana holdings within the market.

Source: Chris Burniske/X

Chris Burniske, a partner at the cryptocurrency-focused venture capital firm Placeholder, remains optimistic about SOL's long-term prospects despite the association with FTX's holdings.

Burniske asserts his bullish outlook by drawing parallels with Ethereum (ETH) and Bitcoin (BTC), highlighting that both cryptocurrencies have faced their own challenges and "baggage" yet have consistently reached new all-time highs during significant expansions. He emphasizes that human beings, institutions, and even cryptocurrencies themselves possess inherent imperfections and challenges, but these do not prevent them from achieving new milestones and successes.

In essence, Burniske's perspective underscores the resilience and potential for growth in the cryptocurrency market, even in the face of past challenges and imperfections.

Sep 18, 2023

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