How could the “Ethereum Destroyer” moniker benefit SOL in 2022?

The corona pandemic and the sky-high gas fees on the Ethereum blockchain are two completely different extremes. However, the struggle to overcome both is just as arduous. And that was Solana’s opportunity to take the stage. In fact, billionaire Sam Bankman-Fried has dubbed Solana as the next big blockchain of 2022.

Specifically, Solana promises to deliver the best of Ethereum, but faster and at a lower cost. However, it is important to note that in 2021 meme coins like DOGE and SHIB have grown exponentially.

Despite receiving a lot of attention and coverage, SOL is still relatively in the sights of many people.

Really the Ethereum Destroyer?

While Ethereum is currently slowly transitioning to Proof of Stake, Solana has been using this consensus alongside Proof of History since its inception. Accordingly, Solana is very fast and can process around 50,000 transactions per second with an average cost of $0.000025 per transaction.

Additionally, smart contracts on Solana are read-only and stateless. There are currently about 400 projects on Solana. It is interesting that there is a large community of many investors and developers. In fact, the founders and employees communicate regularly and have a high interaction rate with the users of SOL.

All of this shows that developers considered Solana because of its love of technology. For example, at the time of writing, Solana’s total value is $7.86 billion, with over 50 decentralized applications built on top of it. This is a sign that blockchain has tremendous growth potential and investors are counting on it.

Total locked on Solana | Source: Defillama

Concerned about gas fees

Although the Ethereum network has tried every trick to scale better, gas fees are still a hindrance. This is one of the main reasons why a large number of developers are switching to the Solana blockchain in 2021. In fact, at the time of writing, Ethereum’s average gas fee is 43 Gwei, while Solana is only 43 Gwei. $0.0025 per transaction.

Gas Tracking on Ethereum | Source: Etherscan

Everything is not good?

While it all might sound like a fairy tale for Solana, it’s important to remember that Solana isn’t as decentralized as it should be. In fact, being a validator on the Solana network is really difficult. The barriers to entry are very high. Also, most coins are only held in a handful of Founder, Team, and VC accounts. Surprisingly, the public holds a very small percentage.

Also, Solana doesn’t have a clear roadmap. Because of this, investors looking to go long may need to view the project with greater skepticism. At the time of writing, for example, the development seems a bit smug. A direct rally to $200 cannot be expected at the moment. Retail SOL buyers may have an equivalent location.

Check the course development

Solana is known for her role as “Ethereum destroyer” when native token SOL exploded from $1.50 to $230 in November 2021. At the time of writing, the altcoin is trading at $92.1 and the bears are taking control of the situation. If SOL fails to find demand, a lower drop to the 1-month support at $86.54 is possible.

However, if bulls find victory, SOL can surge higher to face another resistance at $122. This will be the area where investors are likely to place long orders. However, a $140 flip to support is needed for a sustained rally. The price will then rise and face a 4-month resistance at $172.

On the attached chart, the RSI and MACD favor sellers. Nevertheless, a consolidation within the price range at the time of writing cannot be ruled out.

SOL/USD 4 hours | Source: TradingView

Since the ATH on November 6th, SOL has been sliding along the descending channel (yellow) for the past 3 months. During this time, the 20 EMA (red) is believed to be a strong resistance level.

Now SOL is setting a bearish flag and preparing for a retest of the $85 support area after a period of low volatility near $97. At press time, SOL is trading at $92.1, down nearly 4% over the past 24 hours.

SOL/USD Daily | Source: TradingView

The recent decline has resulted in a nearly 63% retracement as the price pierced key points and formed two bearish flags over the past 3 months. Therefore, the price action sliding below the 200 EMA (green) shows a possible start of a long-term downtrend. Furthermore, the bears have flipped the $97 level from the immediate support to the resistance.

As the price moved down inside the descending channel, the SOL lost its key 11-month trendline (prior support) and continued to decline. However, buyers seem to have entered the support of the 5-month trend line (yellow). As a result, the SOL is showing a promising 48% rebound from the 5-month low on Jan 24 when it reversed from the upper trendline of the descending channel.

For the past three days, this altcoin has also seen a bearish engulfing candle on a bullish wedge breakout. This trajectory shows strong bear movement.

From here, SOL is waiting for a retest of the immediate resistance before testing the $85 support, which coincides with the 5-month trendline support. As the price is not too far from the 20 EMA, the possibility of a downtrend in the coming days is increasing. If the bears weaken, the bulls can invalidate the downtrend. But most likely this will be short-lived as the volume is not strong enough.

SOL’s RSI | Source: TradingView

The RSI has formed a bearish divergence (in blue) with the price as it fell to the 36 level in the past few days. The sideways trend in the RSI could account for a consolidation phase before a larger decline is likely.

In addition, the Squeeze Momentum indicator also entered a period of low volatility. For now, investors/traders should keep a close eye on the $97 level. Any close above should encourage a near-term recovery before a pullback is likely.

Conclude

The price needs an attractive close above the $97-100 range to invalidate the existing downtrends. As the bears continue to apply pressure, SOL is attempting to retest the 5-month trendline support before moving higher.

Also, it will be important to look at the implications of broader sentiment in order to make a profitable move.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page