Solana (SOL) recovered Tuesday modestly from a deep slump that has seen it crashing almost 70% from its record high of circa $267 in November 2021. But the upside retracement looks not enough against the big bearish blow that is coming to markets this week.
The news coming out of Ukraine is extremely problematic. The Russian “peacekeepers” have already entered the rebel-held Donetsk and Luhansk regions as we publish this article. Moreover, Germany, the U.K., and the U.S. have threatened sanctions against top Russian officials and people in business. But overall, the situation looks now bleak enough to bring the entire world to the brink of another tragic war.
On that note, we hope our readers in the affected Ukrainian regions are safe.
Solana Takes the Geopolitical Blow
SOL’s price recovered 4.25% to near $86.50 after falling to its one-month low of around $81 earlier Tuesday. Its move upside appeared synchronous with what occurred elsewhere across the cryptocurrency market. For instance, top crypto Bitcoin (BTC) similarly rebounded Tuesday but continued to tread under the geopolitical risks led by the Ukraine-Russia standoff.
As a result, it appeared SOL merely tailed the same trend that has been hurting Bitcoin, stocks, ruble, gold, and other assets so far. And things did not look bright enough for the blockchain token when assessing its technical parameters, as shown in the chart below.
In detail, SOL appears to have been phasing out of its previous ‘bear flag‘ pattern, a bearish continuation setup that tends to send the price down by as much as the length of the previous downside move that occurred before its formation. Therefore, as the Solana token breaks below the flag’s lower trendline, its likelihood to reach $56 has increased (after measuring the previous slide).
True, how the Ukraine-Russia crisis pans out would also dictate the market’s next direction. If conditions worsen — which they are already after that heated Putin address — investors could rotate their profits from the risk-on markets to hedge in traditional safe-havens, such as gold. That puts Bitcoin and, in turn, Solana at risk of declining further from their current levels.
https://twitter.com/Pentosh1/status/1495917273848193025
Adoption
Phil Gunwhy, partner at Blockasset.co, noted that Solana’s long-term potential lies in its “unique features that have made it the hub for builders bordering on Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs),” adding that its easily scalable infrastructure would eventually bring more demand for SOL tokens.
“Based on this,” he said, “I expect the coin price to get a boost once it reclaims $94, followed by a move towards $112 by the end of February, a price that will arguably still place the coin at an undervalued price level.”