In a technical evaluation, famend crypto analyst Gert van Lagen introduced a particularly bearish outlook for Solana (SOL), suggesting that its worth is poised for a considerable draw back transfer. Van Lagen’s evaluation is underpinned by the broadly acclaimed Elliott Wave Concept, a strategy that seeks to establish recurring patterns and cycles in market worth actions.
Why The Solana Worth Might Crash
On the core of Van Lagen’s evaluation lies a dissection of Solana’s worth motion over the previous few years. In response to his evaluation, the yr 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.
Transferring 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 displays a definite sample of 5 subwaves, aligning with the rules of the Elliott Wave Concept. The presence of those subwaves is a key indicator that the downtrend is prone to persist, as they’re believed to replicate 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. Similar 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 probably mark the completion of the continued downtrend for Solana.
Notably, Van Lagen’s evaluation additionally highlights the presence of bearish divergence on the weekly Relative Power Index (RSI), a broadly used momentum oscillator. Bearish divergence happens when the worth makes greater highs whereas the RSI fails to verify these highs, probably signaling a forthcoming pattern reversal or a lack of bullish momentum.
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Van Lagen posted through X: “I’m brief on SOL –> prepared for the following 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 a precise worth goal. Nonetheless, the blue arrow on the chart means that van Lagen anticipates the SOL worth may plummet to roughly $13. Such a decline would characterize a dramatic worth crash of greater than 90% from the present worth degree.
A 50% Probability That This Will Occur
In his commentary, Van Lagen acknowledged the dangers related along with his brief place on Solana, characterizing it as a “50/50 commerce” and “ballsy.” Nonetheless, he defended his resolution by stating that it’s backed by a “good theoretical framework” and serves as a hedge in opposition to his lengthy positions in different belongings. 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 in opposition to my lengthy positions. There’s good cause to take action when wanting on the remoted chart with out emotion. It’s a dangerous commerce and I’m conscious of it. But in addition backed by a superb theoretical framework,” he said.
Whereas Van Lagen’s evaluation presents a bearish outlook for Solana based mostly on the Elliott Wave Concept, it’s essential to acknowledge that the broader crypto market typically strikes in tandem with Bitcoin. This correlation raises questions amongst different market contributors. 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 huge 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
