Will Solana (SOL) Price Crash Further in Ominous September

September is viewed as a challenging month for financial markets, including cryptocurrencies, due to historical trends of increased volatility and downturns. However, Solana (SOL) is an exception, having never delivered a bearish September since its inception.

The cryptocurrency’s unique resilience could indicate that SOL is primed for a rally, even as broader market uncertainties, including the Federal Reserve’s upcoming interest rate decisions, loom large. Interestingly, a technical setup supports the bullish outlook.

Solana Hits Support That Preceded 25-50% Rallies Earlier

Solana’s price has been trending inside a sideways channel since March 2024. On Sep. 3, it reached the channel’s lower trendline at around $125, which had witnessed 25-50% rebounds, including rallies toward its upper trendline—around $185—earlier in the year.

Therefore, if the fractal plays out as intended, SOL’s price could rally toward $185 in September, up by over 45% from the current price level.

The relative strength index (RSI) has also been trending upward from nearly oversold levels, currently hovering around 38. This rise in RSI suggests that the bearish momentum is weakening, and bulls could gain strength.

Caution Amid Potential Fed Rate Cuts

However, traders should remain cautious given September’s historical volatility.

While the technicals show signs of a potential rally, external factors like the upcoming U.S. jobs report and Federal Reserve rate decisions could introduce sudden market shifts. SOL’s bullish breakout could face headwinds if the broader market sentiment turns negative due to a tight U.S. presidential race or unfavorable economic data.

Bond markets are currently pricing in a 61% probability of a 25 basis point rate cut by the Federal Reserve in September, up from 26% a month ago. Should the Fed cut rates, it could fuel risk-on sentiment across markets, providing a tailwind for SOL and other cryptocurrencies.

However, any delay or reduction in rate cuts could dampen this sentiment, leading to potential downside risks.