One analyst predicts Solana will increase 700% in 2022. Popular analyst Jay Freed says that Solana price performance in 2022 will follow the extraordinary path of SOL in 2021. cryptocoin.com We turn to the reasons for this estimation.
Why will Solana jump?
Reason 1: Institutional Investors: According to the trader, the primary reason for Solana’s continued rise in 2022 is support from institutional capital through private investment funds. “A combination of price hikes and inflows now brings Solana’s assets under management to $97 million, the 5th largest of all investment products,” said the analyst. Solana also has the backing of popular cryptocurrency exchange FTX, which has launched several Solana-based projects. And this is also one of the biggest investors in Solana, along with Andreesen Horowitz and Polychain. It also finds its place in the portfolio of many famous investors such as SOL, Multicoin Capital, Sino Capital. The fact that these big and important investors are backing the project with an “Ethereum killer” narrative is one of the reasons Solana is on the upside.
Reason 2: Critical role in DeFi
Another bullish optimism stems from Solana’s important role in the DeFi ecosystem. The analyst says: “Solana’s DeFi ecosystem is growing rapidly, and several high-end projects are vying to become the blue chips of the network.” Freed emphasizes that Solana “ticks all the boxes for an emerging DeFi-focused Tier 1. Fast block times and a Proof of History mechanism avoid pre-running, and node scalability means the network can theoretically avoid congestion and keep transaction costs low.
Reason 3: GrayScale adds Solana
More importantly, leading institutional investor Grayscale has added Solana to its leading product offering, The Grayscale Digital Large Cap Fund. According to the investor, the fund acquired Solana by selling some of the other assets in the fund. Grayscale has reduced its Bitcoin allocation by around 5% since the last rebalancing. According to the analyst: “The rebalancing highlights how Solana has become a hotspot in the crypto market. The Solana blockchain functions as a high-speed, low-cost competitor to blockchains like Ethereum and a competitor to Cardano, Polkadot, and Binance Smart Chain.”
Freed points out that both the daily and weekly charts show an interesting bullish trend for Solana price. Notably, the daily time frame shows SOL up 713% between mid-July and September 8. The chart formed a flagpole, the first element in the ascension flag or pennant pattern. The trader adds that this exponential growth is followed by consolidation that creates three lower highs and higher lows that, when tied using trend lines, result in the formation of a pennant.
Also, Freed points out that the uptrend and subsequent consolidation from July to October 20 is a continuation pattern known as the bullish pennant. As a result, the trader predicts that this technical formation will increase by 713% to $1,336, adding the distance from the flagpole to the breakout at $164.
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