With Bitcoin (BTC) making its own breakout, Solana (SOL) has been quick to follow suit. Already closing in on Ethereum as the premier layer 1 blockchain network, the $SOL price is likely to continue sucking value out of $ETH going forward.
The cryptocurrency market is on the move once again. The $BTC price is clawing its way towards the top of its bull flag, and the rest of the cryptocurrencies are starting to record breakouts. That said, there is nothing to stop yet another rejection for $BTC before it surpasses the all-important previous swing-high at $70,000. All is still to play for.
Solana greater potential than Ethereum?
However, when the sun is shining on the crypto market, the strongest plays in the sector are going to make plenty of hay. Solana is one of these. The Firedancer validator client is running on testnet, while Frankendancer, its forerunner, is up and running on mainnet.
There is still plenty of criticism of Solana, mainly that it is becoming far too centralised in its attempt for speed, as voiced recently by Edward Snowden at the Token2049 conference in Singapore.
Nevertheless, Solana’s lightning fast technology is still potentially going to continue to divert value from Ethereum’s hugely slower network that relies on layer 2 blockchains to increase its speed.
$SOL price breaks out
Source: TradingView
The short term time frame for $SOL shows that the price has recently broken out of the triangle it has been within since late July this year. The breakout also coincides with a potential breakout of a W pattern, which the price looks as though it might confirm. The measured move for this pattern gives a target of $170, although the triangle breakout would give a much higher target.
$SOL price action follows $BTC
Source: TradingView
Moving right out into the weekly time frame, it can be seen that the $SOL price has pretty much followed the long, sideways price action as for $BTC. More than seven months later, the $SOL price is currently forming a full candle body on top of the 0.382 Fibonacci level, and the price has broken through the descending trend line.
The 0.618 Fibonacci level is also a very important horizontal resistance, which also ties into the possible W pattern breakout target, already mentioned in the 4-hour time frame.
Pitfalls remain for $BTC and $SOL
A negative indicator right now is the Stochastic RSI, just as it is for the Bitcoin price. The fast blue indicator line has crossed over the slow red indicator line, signalling the potential for downside price momentum.
However, in the Relative Strength Index at the bottom of the chart, the indicator line has bounced off of the descending trend line, and is maintaining above the mid 50.00 level. This signals that the bull market is still active. Going below this mid-point would be a sign that the bear market could be beginning.
If Solana bulls can keep the price buoyant this week, and if the number one crypto currency (Bitcoin) can maintain its latest surge, we could be at the start of what might be an exhilarating next stage of the bull market.
Nevertheless, there are plenty of obstacles to surmount before this becomes a much stronger possibility. Rejection for Bitcoin before it can surpass its last swing-high of $70,000 could lead to plenty of downside which would come from a failed rally. Solana would likely suffer worse. Crucial times lie ahead.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
