In a technical evaluation, famend crypto analyst Gert van Lagen offered a particularly bearish outlook for Solana (SOL), suggesting that its value is poised for a considerable draw back transfer. Van Lagen’s evaluation is underpinned by the broadly acclaimed Elliott Wave Principle, a strategy that seeks to establish recurring patterns and cycles in market value actions.
Why The Solana Value Might Crash
On the core of Van Lagen’s evaluation lies a dissection of Solana’s value motion over the previous few years. In accordance with his evaluation, the 12 months 2021 marked the end result of a clear Elliott Wave pattern for Solana, signaling the top of a bullish cycle. This uptrend is characterised by a selected sample of 5 waves, with the ultimate wave appearing because the climactic transfer earlier than a reversal.
Shifting into 2022, Van Lagen’s evaluation identifies the unfolding of the A-wave down, which he classifies as the primary leg of a protracted bear market. Crucially, this A-wave down reveals a definite sample of 5 subwaves, aligning with the ideas of the Elliott Wave Principle. The presence of those subwaves is a key indicator that the downtrend is more likely to persist, as they’re believed to mirror the underlying market sentiment and psychology.
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In 2023, Van Lagen noticed the formation of the B-wave, a corrective rally throughout the broader bear market context. Identical to the A-wave, this B-wave consists of 5 subwaves, adhering to the Elliott Wave Sample for corrective actions. The identification of this B-wave is essential, because it means that the general downtrend has not but been totally exhausted and that additional draw back momentum could also be forthcoming.
Because the evaluation shifts to 2024, Van Lagen’s expectation is for the C-wave to materialize. Within the Elliott Wave Framework, the C-wave is the ultimate leg of the broader bear market cycle, and its prevalence would doubtlessly mark the completion of the continuing downtrend for Solana.
Notably, Van Lagen’s evaluation additionally highlights the presence of bearish divergence on the weekly Relative Energy Index (RSI), a broadly used momentum oscillator. Bearish divergence happens when the value makes larger highs whereas the RSI fails to substantiate these highs, doubtlessly signaling a forthcoming pattern reversal or a lack of bullish momentum.
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Van Lagen posted by way of X: “I’m brief on SOL –> prepared for the subsequent leg down. 2021: Finalized a clear Elliottwave up; 2022: A-wave down of extended bear market <- 5 subwaves; 2023: B-wave of extended bear market <- 3 subwaves; 2024: Expectation is C-wave down. Bearish divergence on the weekly RSI.”
Notably, the analyst refrains from specifying an actual value goal. Nevertheless, the blue arrow on the chart means that van Lagen anticipates the SOL value might plummet to roughly $13. Such a decline would characterize a dramatic value crash of greater than 90% from the present value stage.
A 50% Probability That This Will Occur
In his commentary, Van Lagen acknowledged the dangers related together with his brief place on Solana, characterizing it as a “50/50 commerce” and “ballsy.” Nevertheless, he defended his resolution by stating that it’s backed by a “good theoretical framework” and serves as a hedge towards his lengthy positions in different property. The analyst emphasised the significance of analyzing the remoted chart with out emotion, underscoring the necessity for objectivity in technical evaluation.
“Brief on SOL is a 50/50 commerce, ballsy, but in addition a hedge towards my lengthy positions. There’s good cause to take action when trying on the remoted chart with out emotion. It’s a dangerous commerce and I’m conscious of it. But in addition backed by a very good theoretical framework,” he acknowledged.
Whereas Van Lagen’s evaluation presents a bearish outlook for Solana based mostly on the Elliott Wave Principle, it’s essential to acknowledge that the broader crypto market typically strikes in tandem with Bitcoin. This correlation raises questions amongst different market members. One person encapsulated this sentiment by commenting, “That is actually unusual. You assume BTC will transfer up within the coming weeks however SOL will transfer down? We’re nonetheless in a market construction the place large cash don’t transfer down that a lot whereas Bitcoin is shifting up.”
At press time, SOL traded at $165.
Featured picture created with DALL·E, chart from TradingView.com
