The central theses
- Solana and Avalanche are each down over 30% in the last 72 hours.
- Both layer 1 tokens are now testing crucial support areas and their future looks uncertain.
- Meanwhile, investors continue to exit the markets amid an overall crypto market decline.
Share this article
Solana and Avalanche appear to have hit a crucial demand barrier after their market value fell more than 50% in the past few weeks. Still, the lack of buyers at the current price level is a red flag.
Solana and Avalanche on weak support
Layer 1 tokens SOL and AVAX have collapsed as fear and despair echo in the cryptocurrency market.
Solana is down more than 36% over the past three days, from a high of $75 to a recent low of $48. The steep correction prompted SOL to test the lower border of a parallel channel at $51.60, where it has been contained since September 2021.
Such a key demand zone would have to remain in place to prevent the layer 1 token from suffering further losses.
Measuring the width of the channel suggests that a crucial weekly close below the $51.60 support level could trigger a 50% correction. In such unique circumstances, Solana could collapse under the selling pressure towards $26 or below.
The eighth largest cryptocurrency by market cap needs to hold above the channel’s lower trendline at $51.60 for a chance to erase some recent losses. The price history shows that SOL has marked the middle or upper border of the channel each time it has recovered from this support level. Similar price action could lead to a surge to $70 or even $95.
Avalanche has also taken a significant nosedive over the past three days. The layer 1 token plunged nearly 50% after losing its $51.60 support level. The steep downtrend appears to be part of a bearish breakout from a head and shoulders pattern that has been developing on the weekly chart by AVAX.
Now that Avalanche has reached the $28 target dictated by this bearish technical formation, it remains to be seen if it can gather the strength to bounce.
Precarious market conditions suggest lower lows. But for that, AVAX would need to print a weekly candlestick close below $27. Breaking this key demand zone could encourage further selling among market participants, which would lead to a drop to $17 or even $10.
On the upside, bulls would need to push Avalanche above $37 and defend this level to invalidate the bearish outlook. Tackling such a difficult task could encourage sidelined investors to re-enter the market, which would push AVAX down to $51.
Disclosure: At the time of writing this article, the author of this article owned BTC and ETH.
For more important market trends, subscribe to our YouTube channel and get weekly updates from our leading bitcoin analyst, Nathan Batchelor.
Share this article
Maple Finance expands to Solana
Maple Finance, the decentralized marketplace for institutional loans, has launched on Solana. Together with its partners, Maple will launch a $45 million pool to initially expand its Solana ecosystem. maple finance…
Valuation of Avalanches Ava Labs at $5.25 billion: report
Ava Labs, the development company behind the Avalanche blockchain, is reportedly raising $350 million at a $5.25 billion valuation. Avalanche Developer plans to raise Ava Labs Inc. to develop…
2017-era Layer 1s show signs of life (somewhat)
EOS, Zilliqa, and Internet Computer, three early Layer 1 cryptonetworks, are gaining bullish momentum. Recent gains could extend into the week as resistance weakens. EOS makes a U-turn…
