Solana (SOL) could see another 60% drop after NFT projects leave the network

Solana (SOL) price may resume its free fall towards $4 due to bearish indicator readings and negative news around its network.

SOL is the native token of the Solana blockchain, which differentiates itself by using the Proof-of-History (PoH) consensus method and combining it with the Proof-of-Stake (PoS) mechanism. The platform was founded by Anatoly Yakovenko and specializes in smart contracts.

There were conflicting reports about the project last week. Last Friday (23rd), Delphi Digital announce That Solana was now the second ecosystem for NFTs, after only the Ethereum (ETH) network. Measured by 30-day turnover, the blockchain has lagged behind Cardano, Polygon, and BNB networks.

However, three days later, the negative news arrived. DeGods and y00ts, two of the most important NFT projects in the Solana ecosystem, have announced that they are moving to Ethereum and Polygon, respectively. When that happens, Solana will probably be in the top 10 in terms of NFT sales volume altogether.

While there are rumors that both projects asked the Solana Foundation for money to stay on the blockchain, this has yet to be confirmed.

Solana’s downward trend is far from over

Solana price has been on the decline since its all-time high of $259.90 in November 2021. Between May and November of this year, the price bounced around the horizontal support area of ​​$29 on November 14 amidst a massive bearish engulfing candle. The price reached as low as $10.94 before the end of the month.

While the decline was significant, the most likely price prediction is a continuation of the bearish move towards $4, and the two main reasons for this are:

1. Weekly RSI that fell below 25 and did not produce any bullish divergence.
2. The fact that there is no horizontal support up to $4.

Moreover, SOL price is dropping below the low of $10.94 and invalidating the moderate bullish weekly candlestick from November 21-28.

Measured from the current price, a drop to $4 would equate to a 64% reduction. For the trend to be considered bullish, the price needs to regain the horizontal resistance area of ​​$29.

There is no bullish correction in the short term

The daily chart readings are in line with the weekly chart. First, SOL price dropped from the $13 horizontal area, after pre-checking the area as support (green symbol) twice.

Then the daily chart’s RSI broke the bullish divergence line, which preceded the previous rebound high. As a result, a short-term rally is likely and a long-term bearish move will continue for the next 24 hours and beyond.

In conclusion, the price outlook for Solana is likely to be bearish, supporting a decline towards the $4 horizontal support area, furthermore, negative news regarding the abandonment of two of the largest NFT projects in its ecosystem may accelerate the decline.