Former BitMEX CEO, Arthur Hayes, recently disclosed his purchase of Solana’s SOL (SOL) at what could potentially be its local peak. Despite the cryptocurrency already experiencing a 500% rebound from its market bottom in December 2022, Hayes remains bullish on its future prospects. His decision to invest in SOL came on the heels of VanEck’s prediction of a staggering 10,600% price rally for the coin by 2030. Additionally, analysts from FieryTrading suggested that if Solana breaks the resistance at $38, it may witness another significant surge of 150%. Notably, SOL’s value skyrocketed by an impressive 80% in October 2023, reaching a 14-month high of approximately $46.75. Hayes himself purchased SOL around this price point, anticipating further upward momentum in the coming weeks.
While Hayes remains optimistic, cautionary signs have emerged with regards to SOL’s price trajectory. Both technical and fundamental indicators are indicating a potential 30% price drop in November. The daily Relative Strength Index (RSI), a key momentum indicator, has reached its most overbought levels since January 2023. Historically, overbought RSI readings often lead to corrective phases or periods of consolidation for the underlying asset. SOL’s previous market behavior has shown that overbought RSIs often precede price corrections of 35% to 50%. In light of this pattern, a sharp correction in November seems increasingly probable.
Fractal analysis reveals that SOL’s overbought RSIs have consistently preceded significant price corrections throughout 2023. In the event of a bearish scenario, the next downside target for SOL would likely be around its June to November 2022 support level, close to $30.25. This represents a potential decline of around 30% from its current price. Interestingly, this support level aligns with SOL’s 200-3D Exponential Moving Average (200-3D EMA), which is represented by the blue wave in the price chart. A break below this milestone could prompt SOL bears to test the cryptocurrency’s ascending trendline support at approximately $26 as their next target on the downside.
Despite the potential risks of a price correction, it is important to acknowledge Solana’s ongoing scalability initiatives. Hayes may be influenced by his belief in Solana’s ability to address scalability issues that have plagued its top competitor, Ethereum. If Solana manages to capture a significant portion of Ethereum’s market share, it could pave the way for sustained growth and further solidify the foundation for a bullish trajectory.
Arthur Hayes’ recent investment in Solana and his bullish stance on the cryptocurrency reflect the immense potential for future growth. However, caution is warranted as technical and fundamental signals suggest a possible correction in the near term. By analyzing fractal patterns and considering downside targets, investors can better prepare for potential market movements. Ultimately, the success of Solana will depend on its continued scalability efforts and ability to differentiate itself in a fiercely competitive landscape. As the cryptocurrency market evolves, it remains crucial for investors to tread carefully and stay informed of the latest developments.