SOL is down 97%. Will it recover?

Key points:

• While a brutal year for the market, Solana now joins the ranks of the worst-performing coins in 2022, namely FTX Token and LUNA, which are down around 98%.
• SOL's Doji appeared after a long decline. This, combined with the coin’s oversold (<30) relative strength index value, suggests a long-term bullish reversal is likely in 2023.
• There are several reasons for SOL's underperformance in 2022, such as a hawkish Fed, repeated shutdowns of Solana, a $200 million hack of one of its associated wallets, and possible exposure to FTX.

Solana is down 97% from the 2021 peak

On the daily chart, the price of SOL rose to around $10.25, up more than 20% from the previous day's low of around $8.

SOL/USD weekly chart. Source - TradingView

Still, the intraday rally has done little to offset a broader downtrend — a 97% drop from an all-time high of $267.50 set in November 2021 and a drop of more than 20% in the past week.

But while a brutal year for the market, Solana now joins the ranks of the worst-performing coins in 2022, namely FTX Token and LUNA, which are down around 98%.

FTT (red) vs. LUNA (green) vs. SOL (blue) performance since November 2021. Source - TradingView

SOL price could recover 50%

However, Solana's recent price increases suggest further increases are likely by 2023.

This is mainly due to the Doji - a candlestick pattern that forms when an asset opens and closes near or at the same level within a given time frame. On Dec. 29, SOL formed what appeared to be a "standard Doji" on its daily bar chart.

Traditional analysts view the Doji as a potential reversal candlestick pattern because it shows that bears and bulls are at a standoff. Therefore, from a technical standpoint, a Doji pattern during a long-term uptrend could indicate an imminent bearish reversal and vice versa.

As shown in the chart below, SOL's Doji appeared after a long decline. This, combined with the coin’s oversold (<30) relative strength index value, suggests a long-term bullish reversal is likely in 2023.

SOL/USD 1D chart featuring Doji candlestick pattern. Source - TradingView

The main upside target for SOL appears to be around $15, which is more than 50% above the current price levels. The $15 level has acted as resistance since November 13, 2022.

Fighting negative fundamentals

Solana has become one of the underperforming cryptocurrencies in 2022, losing nearly 97% year-to-date. In comparison, the total cryptocurrency market capitalization fell by only 65% ​​over the same period.

There are several reasons for SOL's underperformance in 2022, such as a hawkish Fed, repeated shutdowns of Solana, a $200 million hack of one of its associated wallets, and possible exposure to FTX.

In early December, Solana Labs Inc. co-founder Anatoly Yakovenko clarified that nearly 80 percent of projects on the Solana blockchain have absolutely no ties to FTX, saying their platform offers more than the defunct cryptocurrency exchange.