- Analysts predicted a significant surge in SOL’s price.
- Meme coin activity on the network has been driving high demand for the token.
With only a couple of days left till January ends, the price of Solana [SOL] had begun to pick up steam again. At press time, SOL’s price was $96.61. This value accounted for a 7.38% seven-day increase.
But for some analysts like Ali Martinez, SOL could be prepared to climb much higher in the coming days.
Correction season is over
According to Martinez, the Solana native token was breaking out of a descending channel. He also mentioned that if SOL holds above $94, the value could rise to $113 in the near term.
#Solana appears to be breaking out from a descending parallel channel. If $SOL can hold above $94, it has a great chance of advancing toward $113! pic.twitter.com/cNdS6GeXXK
— Ali (@ali_charts) January 28, 2024
A descending channel appears when a trendline connects the lower highs and lower lows of an asset’s price.
As displayed above, these trendlines are parallel to each other, with one indicating resistance and another representing support levels.
Typically, the chart is a bearish one. But the value could fly very high when a cryptocurrency breaks out of the pattern.
When the year started, SOL’s price was around $100. But on the 2nd of January, the value jumped and by the end of the said date, the token changed hands at $116.
However, a broader market correction ensured that the hike did not last long, and SOL fell as low as $79 on the 23rd of January.
In the current market condition, AMBCrypto found that demand for SOL has been increasing.
If sustained, the price could end the month higher than it started it. A few weeks ago, we reported how the stablecoin volume on Solana had increased.
Whenever this happens, it means there is a high network activity.
It also implies that market participants are actively involved in trading tokens built under a blockchain. For Solana, trading of meme coins was the major reason this volume surged.
“WEN” does it end?
Using data from DEXScreener, we observed that many Solana users were actively buying memes. And these meme coins do not include more popular ones like Bonk [BONK] and dogwifhat [WIF].
For example, GameStop [GME], a recently-created meme coin, had risen to a market cap of $9.2 million.
Source: DEXScreener
Another meme that drove SOL demand higher was WEN. At press time, WEN’s market cap had increased to $142 million. But this token was not a regular token that degenerates flocked to.
Instead, the token was debuted as the first cryptocurrency to be deployed on Jupiter’s launchpad. For context, Jupiter is the biggest Solana-based Decentralized Exchange (DEX).
Furthermore, over one million Solana wallets got 643,652 WEN tokens each to “celebrate” the launch. As of the time it launched, WEN’s market cap was a little over $55 million.
So, the recent surge meant more users were buying into the token.
Should this continue, then SOL may have no other option than to rise higher than $96 before the 31st of January.
New players find safety in Solana
However, another analyst Michaël van de Poppe shared Martinez’s view. But van de Poppe seemed more optimistic than the former.
According to him, SOL could continue in the upward direction. But rather than stopping at $113, the value could rise in the $140 direction.
#Solana is ready for upward continuation here.
After the initial push upwards, there's always a period of consolidation, and it seems it's ended.
A higher timeframe support test at $80 provided support.
Looks likely we'll be continuing towards $140. pic.twitter.com/5DRQaRhbZh
— Michaël van de Poppe (@CryptoMichNL) January 28, 2024
Apart from the price action, new participants have been running to the Solana network and registering in droves.
As a result, data from The Block showed that the blockchain recorded its highest influx of new addresses since its launch.
Source: The Block
The chart above indicated that a lot of the addresses were interaction with SOL. Also, the metric is a function of user adoption, confirming how Solana was one of the networks with this highest traction of late.
Furthermore, AMBCrypto checked out SOL’s price action on the daily timeframe. According to the SOL/USD 1D pair, the price seemed to be heading toward $120.
At press time, SOL’s value had flipped both the 9 (blue) and 20 (yellow) EMAs. When this happens, it suggests that the cryptocurrency has a high potential for trading higher.
Is the coast getting clearer?
If bulls push SOL to break above the $100.15 resistance, then the token could add another 20% increase. But that would also depend on the bulls’ ability to defend it.
Should SOL fall below $89.69, then the price might drop as low as $80.
However, the signals shown at press time did not support a nosedive. For instance, the Aroon Down (blue), despite being at 57.14%, trended downward. This was a sign that sellers were becoming weak.
The Aroon Up (orange) at press time, was 21.43%. Although it was lower than its opposite number, the indicator looked set to send SOL higher than $100.
Another indicator backing the potential surge was the Relative Strength Index (RSI).
As of this writing, the RSI reading has increased to 53.71. The trend also showed that SOL had broken out of the negative divergence. If bulls sustain the momentum, the token value might hit $105 for a start.
In addition, the Directional Movement Index (DM) showed that buyers and sellers were still in a heated contest. At press time, the +DMI (green) was 22.25 while the -DMI (red) was 21.30.
This closeness was proof that the coast was not yet clear for either side.
Source: TradingView
Is your portfolio green? Check the Solana Profit Calculator
However, the direction SOL finally heads might depend on the Average Directional Index (ADX). Should the ADX (yellow) rise higher than 25, it could provide backing for a strong directional upward move.
But if the ADX remains lower, SOL might find it hard to surge.
