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Why the price of Solana is just one collapse away from a 40% drop in June.

Why the price of Sol

Why the price of Solana is just one collapse away from a 40% drop in June.

Outages on the network and dwindling smart contract reserves put further downward pressure on the SOL price.

As it approaches the pinnacle of its current "descending triangle" pattern, Solana (SOL) is approaching a key collapse point.

The groundwork for SOL's 40% price drop

SOL's price has been consolidating inside a range established by a falling trendline resistance and horizontal trendline support, forming a descending triangle—a trend continuation pattern.

As a result, the likelihood of SOL breaching below the triangle range is higher because it has been drifting lower, down nearly 84% from its November 2021 peak of $265.

A breakdown move followed by the development of a falling triangle, according to technical analysis, could last until the price has fallen as far as the triangle's maximum height. SOL's negative price estimate for June is $22.50, or nearly 40% lower than today's price.

According to a study, not all descending triangles lead to breakdowns. Based on the pattern's history, a descending triangle setup has a 7 out of 10 chance of hitting its profit target. As a result, SOL has about a 30% chance of averting a collapse and rebounding.

The possibility of a Solana comeback

Descending triangles that develop during downtrends but don't lead to price reversals usually indicate the asset's bearish cycle is nearing its finish.

Assume SOL maintains a firm grip on the triangle's horizontal trendline support. The SOL/USD pair may then break through the structure's falling trendline resistance and ascend to its maximum height, putting its upside objective at $65, up 72 percent from today's price.

The bullish profit goal of the descending triangle also corresponds with SOL's 50-day exponential moving average near $59.

Meanwhile, SOL's daily relative strength index (RSI), which has been rising since May 12 after reversing from an oversold level of 30, adds to the token's upside potential.

Solana is down 75% from its ATH.

Solana's basics, on the other hand, are a bit of a mixed bag.

Due to a series of outages in recent months, it has functioned badly as a blockchain network. According to data from Defi Llama, the total value locked (TVL) inside Solana's smart contracts has plummeted to $3.69 billion, down 75% from a record high of $14.83 billion in December 2021. In the first quarter of this year, Solana saw continued increase in network traffic, developer engagement, network infrastructure, and the whole ecosystem.

Solana's venture capital arm announced a $100 million investment and grant fund on June 8 to assist the company's blockchain-based products in South Korea, a country whose crypto economy has been harmed by the recent collapse of Terra, a $40 billion "algorithmic stablecoin" project.

The decision is expected to entice developers who wish to move their projects from Terra to Solana, thereby increasing demand for SOL.

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