In the fast-moving world of cryptocurrency, one altcoin has made a particularly big splash this past week: Solana. Among the top 100 cryptocurrencies by market cap, SOL price posted the second-highest gain of the past seven days, up 8.5%. For many, the unexpected surge in price has pushed the SOL token into what is arguably the most critical resistance level at the moment: the 200-day exponential moving average (EMA).
Looking at the 1-day chart, Solana stock price broke above the 38.2% Fibonacci retracement level of $19.71, as predicted in our last chart analysis, and subsequently broke above the psychologically important level of $20.00. While the first attempt failed, Solana bulls have had a huge success in the second attempt.
However, as we predicted in our last price analysis, selling pressure increased at the 200-day moving average, currently at $21.97, and the bulls capitulated. Similar to the last week of June, a consolidation may now be needed first to reset technical indicators. In mid-June, SOL rallied 26%, which was followed by a 7-day consolidation (bull flag).
A similar scenario may be playing out now. A retest of the 38.2% Fibonacci level at $19.71 is likely. It is worth noting that the pressure on the bulls is immense as the Solana token has not been able to break above the 200-day moving average since April 2022. The most recent rejection occurred in April 2023, which was followed by a 44% plunge.
However, the external environment of the crypto market is different now. The altcoin market has also been injected with new vitality due to the hope of Bitcoin spot ETF. Although Solana has strong fundamentals, it was hit particularly hard by the FTX incident and the recent SEC declaration that it is a security. Therefore, the recovery provides huge upside potential.
If the 200-day moving average breaks, the 50% Fibonacci retracement level ($23.36) will surely be just a short-lived intermediate level before the yearly high of $27.00, which also coincides with the 61.8% Fibonacci level. A break above this chart level could open the floodgates for a larger rally.
However, this would certainly require a Solana-specific catalyst, in addition to a general uptrend across the entire cryptocurrency market. That doesn’t seem to be the case for the recent rally.
Reasons Behind the Recent Solana Price Increase
While there are no specific identifiable catalysts for Solana’s recent rise, several factors appear to have contributed to its upward trajectory. One of the catalysts was the announcement of partnerships with well-known entities. For example, Coca-Cola Serbia partnered with Solana’s NFT platform SolSea to offer limited edition hoodies with NFTs attached during music events.
Additionally, on-chain data firm Santiment noted that Solana’s popularity on social media platforms cannot be ignored. Bullish sentiment around Solana has reached new heights, with Reddit forums abuzz with discussions about the token’s potential. Market influencers and Reddit traders may have played a role in driving Solana’s price action, as their influence on market movements is well documented. This social media hype has undoubtedly added fuel to the fire, pushing SOL’s price even higher.
Interestingly, Solana faced regulatory hurdles in June when it was threatened with delisting by several U.S. exchanges due to SEC litigation. However, the allegations that SOL was an unregistered security were strongly denied by the Solana Foundation. Regardless of the final outcome, this regulatory uncertainty casts a shadow over Solana’s future, indicating potential challenges ahead.
But despite these obstacles, Solana has shown resilience. After weathering the storm brought about by the FTX bankruptcy, the platform has made an impressive recovery. Its technology, which enables fast and reliable decentralized applications and cryptocurrency services, continues to attract the market. This appeal, coupled with the platform's encouraging performance, has piqued investor interest and fueled expectations of further gains.
So while the exact catalyst behind Solana’s surge remains elusive, the combination of partnerships, social media buzz, and its resilient technology paints a picture of a cryptocurrency on the rise.