Solana (SOL) sees first-ever 10 consecutive months of decline... Is now the opportunity?

▲ Solana (SOL)/AI-generated image

Solana (SOL) has experienced its first-ever 10 consecutive months of decline on a monthly chart basis. However, an analysis suggests that network growth indicators point in the opposite direction of the price.

Dan Gambardello, host of the cryptocurrency YouTube channel Crypto Capital Venture, stated in a video uploaded on August 2 (local time) that Solana's price and fundamentals are diverging extremely. Gambardello claimed, “It is very rare to see such a significant divergence between fundamentals and price,” adding, “This is a bullish environment that emerges after several market cycles.” However, he clarified that the video was not an endorsement to buy Solana and that he himself is not a Solana holder.

Gambardello presented corporate adoption and on-chain activity as evidence of the Solana ecosystem's growth. According to the video, 140 companies have chosen Solana as the basis for their stablecoin businesses, and Solana accounted for 97% of on-chain stock trading volume in July. It has ranked first in cryptocurrency network revenue for nine consecutive quarters, and Western Union is processing payments on Solana instead of SWIFT (Society for Worldwide Interbank Financial Telecommunication). Transaction finality time decreased from 12.8 seconds to 0.15 seconds, and the number of transactions in June reached 3.77 billion, he added. Approximately two-thirds of the total supply is staked, he revealed.

His own risk analysis model also rated Solana as being in a low-risk zone. Gambardello disclosed Solana's risk score as 13. He claimed that in past periods where the same score appeared, prices rose both three months and one year later. While the model incorporates various variables such as trading volume, game theory, and emerging asset analysis, the specific calculation method and full sample size were not disclosed. Gambardello stated, “The price action is uncomfortable and unsightly, but the risk is in a low zone.”

Gambardello also compared the past monthly chart trends of Bitcoin (BTC) and Ethereum (ETH). He explained that Bitcoin formed a market bottom after accumulating 10 monthly red candles during bear markets in 2014, 2018, and 2022, respectively. Not all 10 red candles appeared consecutively. Ethereum recorded 10 monthly red candles in the 2018 bear market and 9 from 2021 to 2022. At the time of the video's production, Ethereum's monthly red candles had increased to 8. Gambardello assessed that a prolonged decline might be a process of redistribution of holdings rather than an asset collapse.

The macroeconomic environment was also presented as a basis supporting the possibility of an altcoin rebound. Gambardello explained that in July 2019, when the US first ended quantitative tightening, altcoin dominance, excluding the top 10 by market capitalization, bottomed out. He argued that if the Purchasing Managers' Index (PMI) and business cycles turn into an expansionary phase, Solana could experience a full market cycle, from a bear market to an expansionary bull market, for the first time. However, he did not rule out the possibility of Solana falling to $54 or the monthly decline continuing for more than 11 months. Gambardello emphasized, “Risk must be managed within a range where you can afford to lose the entire amount,” and “Risk often decreases in periods where the price is most uncomfortable.”

[Article Key Summary]

-Solana has experienced its first-ever 10 consecutive months of decline on a monthly chart basis. However, corporate adoption, on-chain transactions, and network revenue indicators showed growth.

-Dan Gambardello's proprietary analysis model rated Solana's risk score as 13, claiming that in past periods with the same score, prices rose both three months and one year later.

-Gambardello presented the possibility of a rebound based on Bitcoin and Ethereum's past decline cycles, while also warning of Solana's potential drop to $54 and the risk of asset value disappearing.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*