Solana price slowly forms a rare pattern: can SOL surge 270%?

Solana's stock price fell from an annual high of $295.52 to a low of $112 this week, reducing its market value by $71 billion, and its market capitalization from $139 billion to $68 billion.

Solana's decline comes at a time when the cryptocurrency industry continues to decline, with the total market capitalization of the entire industry reaching $2.8 trillion.

The price drop was also caused by growing concerns about the Solana ecosystem, which is increasingly associated with memes. The market cap of all Solana memes tracked by CoinGecko has fallen from $25 billion earlier this year to $7.7 billion. The main concern is that many of these memes have proven to be scams.

Another factor affecting Solana's price is the large token unlock that happened earlier this month, which is related to FTX's recent distribution. Unlocking tokens puts more tokens into circulation, potentially making them more dilutive and driving down the price.

Solana has also lost market share to Ethereum (ETH) in the DEX industry. According to DeFi Llama, the total volume processed by on-chain DEX protocols in the last 30 days was $76.95 billion, lower than Ethereum’s $84 billion.

On the positive side, the indication is that Solana will make a strong comeback once the current crypto crash subsides.

The weekly chart shows that the accumulation and distribution indicator has been rising steadily for the past few months, which indicates that investors are accumulating SOL even during a downturn.

Most importantly, Solana is forming a cup and handle pattern, which is a bullish formation, consisting of a rounded bottom, horizontal resistance line, and a pullback.

In the case of Solana, the horizontal line connects the highest levels from 2021 to 2024. The continued retreat represents the formation of the handle section. If Solana sustains above $100, it has a good chance of rising.

The depth of the cup is approximately 95%. Measuring the same distance from the top of the cup indicates a potential rise to $505, which represents a gain of 270% from current levels.

The main caveat is that the cup and handle pattern takes time to complete, meaning a 270% rise can take months or years. For example, the cup section took three years to form.