Solana erases its ‘Google rally’ gains but a 50% SOL price recovery is still in play

Key points:

• The SOL slump coincided with reports that Alameda Research has $8 billion in debt, but may not have the cash on its balance sheet to meet those obligations.

• Still, on Nov. 7, traders expressed interest in holding the price of SOL above $30, a level of technical support. One reason could be a string of upbeat news over the weekend, including the launch of smartphones, DApp stores, and Google Cloud partnerships.

• Additionally, Solana continues to gain traction in the non-fungible token (NFT) space. On November 2, Instagram added support for Solana-based NFTs, allowing users to create, sell, and market their favorite digital artwork and collectibles.

• A break above the $37 resistance line could see the SOL test the $44.25-$47 range by December 2022, or a 50% recovery at current price levels. Conversely, on a long-term break below the $27.75-30 support area, the price of SOL could fall to around $19.50, or around 40% lower than today’s price.

Alameda Research Bankruptcy Rumors Focus on SOL

On Nov. 7, the price of SOL plunged nearly 6% to around $30.50. The intraday sell-off was part of a broader pullback trend that began on Nov. 5, when SOL peaked around $38.75. Since then, the Solana coin is down more than 20%.

The SOL slump coincided with reports that Alameda Research has $8 billion in debt, but may not have the cash on its balance sheet to meet those obligations.

Interestingly, the value of all of these assets has fallen in tandem over the past 48 hours — including SOL as well as FTX tokens, Serum (SRM), and Oxygen (OXY) — amid fears of cascading liquidations if Alameda Research goes bust.

1. low liquidity tokens

$4.6bn of the assets are in low liquidity tokens:

⚰️ $SOL
⚰️ $SRM
⚰️ $MAPS
⚰️ $OXY
⚰️ $FIDA

other than SOL there is no way to liquidate the rest of the holdings without completely crashing the markets

the last 4 on the list are highly dillutive too!

— otteroooo (@otteroooo) November 7, 2022

Google partners, NFTs grow

Still, on Nov. 7, traders expressed interest in holding the price of SOL above $30, a level of technical support. One reason could be a string of upbeat news over the weekend, including the launch of smartphones, DApp stores, and Google Cloud partnerships.

Additionally, Solana continues to gain traction in the non-fungible token (NFT) space. For example, the total number of NFTs issued on the Solana blockchain increased 19.3% sequentially to over 8 million in Q3 2022.

James Trautman, the researcher at data source Messari, noted: “Multiple developments in Solana’s NFT division have kept Solana in a strong position relative to the top L1 peer group in secondary NFT sales, adding:

“Secondary sales volume managed to eclipse Ethereum in early September. The majority of the activity during that period took place on Magic Eden V2.”

On November 2, Instagram added support for Solana-based NFTs, allowing users to create, sell, and market their favorite digital artwork and collectibles.

50% SOL price recovery?

As mentioned above, the correction in SOL price is showing signs of weakness as it retested $30 as support on November 7.

Since August 2022, SOL has rallied from this support line twice to nearly $37 in addition to the October price drop to $27.75. That same price cap, combined with months of descending trendline resistance, helped limit price gains for Solana coin in the week ended Nov. 6.

A break above the $37 resistance line could see the SOL test the $44.25-$47 range by December 2022, or a 50% recovery at current price levels.

Conversely, on a long-term break below the $27.75-30 support area, the price of SOL could fall to around $19.50, or around 40% lower than today’s price.

As shown in the chart above, the $19.50 level acts as support from March 2021 to July 2021.