Solana Faces Potential Drop Despite Positive Ecosystem Developments

• Ali Martinez suggests Solana might drop further due to a head and shoulders pattern forming on the chart.
• Solana’s ecosystem is gaining institutional recognition with the approval of the first Solana-based spot ETF in Brazil.

Solana (SOL) is currently in the spotlight as the broader cryptocurrency market attempts to regain impetus following recent downturns. Despite the market’s attempts to recover, Solana is again under examination from a well-known analyst, who believes the token is on the verge of a further drop.

Ali Martinez, a well-known on-chain analyst, has released his latest findings on Solana’s price chart, which have raised investor concerns.

#Solana could be forming a head and shoulders pattern in the hourly chart, which suggests that a drop below $141 might trigger a correction that sends $SOL to $122! pic.twitter.com/o39Vn0FY8z

— Ali (@ali_charts) August 12, 2024

Potential Bearish Pattern Signals Possible Decline for Solana 

According to Martinez, Solana may be developing a head and shoulders pattern on the hourly chart. This pattern is commonly seen as a bearish indication, and in this case, it indicates that if Solana’s price goes below $141, it may initiate a correction, sending the token tumbling below $122. This probable decline has raised concerns among traders who are keenly monitoring the situation.

At the time of writing, SOL is trading at $144.52, up 0.51% over the last 24 hours and 2.81% in the last seven days.

However, despite these recent increases, the danger of a severe reversal remains. The crypto market is on edge, waiting to see if the projected head and shoulders pattern would result in a further decrease in Solana’s price.

On the other hand, there has been some positive news for Solana, which may offset the pessimistic picture. The Brazilian Securities and Exchange Commission has approved the first Solana-based spot ETF, according to a prior CNF report.

Although this pre-operational ETF has yet to get final approval from the Brazilian stock exchange, B3, its ultimate introduction might significantly strengthen Solana’s market position.

The ETF, which will be accessible through Asset Manager QR with Vortx as manager, will use the CME CF Solana-Dollar Reference Rate as its underlying index. This development is viewed as a significant step forward for Solana as it continues to receive institutional recognition.

Furthermore, in another interesting development, Ethena Labs has released USDe on Solana, incorporating SOL as a potential collateral asset, subject to governance approval.

Solana users can now receive incentives with sUSDe and Sats Ethena thanks to their cooperation with new protocols. This initiative is expected to expand the value of Solana in the DeFi space.

Solana’s ecosystem remains strong, with a Total Value Locked (TVL) of around $4.79 billion. Furthermore, the stablecoin market cap within Solana’s ecosystem is around $3.68 billion, indicating tremendous activity and investment in the network.