In the fast-moving crypto world, one altcoin made particularly high waves last week: Solana. Within the top 100 cryptocurrencies by market cap, the SOL price recorded the second highest price increase within the last seven days with 8.5%. And the unexpected surge in price for many has catapulted the SOL token to arguably the most crucial resistance at the moment: the 200-day exponential moving average (EMA).
Looking at the 1-day chart, the Solana share price was able to break above the 38.2% Fibonacci retracement level at $19.71, as predicted in our last chart analysis, and subsequently crossed the psychologically important $20.00 mark. While the first attempt failed, the Solana bulls celebrated a resounding success in the second attempt.
However, as predicted in our last price analysis, there was increased selling pressure at the 200-day EMA currently at $21.97, to which the bulls succumbed. Similar to the last week of June, a consolidation may now be needed first to reset the technical indicators. In mid-June, SOL posted a 26% rally, followed by a seven day consolidation (bull flag).
A similar scenario could be possible now. A retest of the 38.2% Fibonacci level at $19.71 could be on the table. Remarkably, the pressure on the bulls is huge as the Solana token has failed to break the 200-day EMA since April 2022. The most recent rejection occurred in April 2023, followed by a 44% crash.
However, the external circumstances in the crypto market are different now. Due to the hope for a Bitcoin spot ETF, new life has been breathed into the altcoin market as well. Solana, despite its strong fundamentals, has been hit particularly hard by the FTX drama and more recently the SEC’s declaration of it as a security. Accordingly, a recovery offers plenty of upside potential.
If the 200-day EMA breaks, the 50% Fibonacci retracement level (at $23.36) would certainly be only a short intermediate level before the yearly high at $27.00, which also coincides with the 61.8% Fibonacci level. A break above this chart level could open the floodgates for an even more massive rally.
However, in addition to a general uptrend in the overall crypto market, this will certainly require a Solana-specific catalyst. For the recent rally, this does not really seem to exist.
Reasons Behind The Recent Solana Price Rally
While there isn’t a specific identifiable catalyst for Solana’s recent pump, several factors seem to be contributing to its upward trajectory. One driver has been the announcement of partnerships with notable entities. For instance, Coca-Cola in Serbia collaborated with Solana’s NFT platform, SolSea, to offer limited edition hoodies accompanied by NFTs during a music event.
🥤 Coca-Cola in Serbia teams up with SolSea NFT platform 🌊 for a unique collaboration at a music event 🎵.
They’re giving away limited edition hoodies 🧥 and NFTs 🖼️ to lucky participants! pic.twitter.com/f4k3idGzvI— Solana NFTS Notification (@solananftsnews) July 9, 2023
Moreover, Solana’s popularity on social media platforms cannot be overlooked, as on-chain data firm Santiment noted. The bullish sentiment surrounding Solana has reached new heights, with Reddit forums buzzing about the coin’s potential. Market influencers and Reddit traders have likely 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, propelling SOL’s price even higher.
Interestingly, Solana faced a regulatory hurdle in June when it was threatened with delistings from several US exchanges due SEC lawsuits. However, the allegation that SOL is an unregistered security is vehemently denied by the Solana Foundation. Regardless of the ultimate outcome, this regulatory uncertainty has cast a shadow over Solana’s future, indicating potential challenges ahead.
But despite these obstacles, Solana has demonstrated resilience. After weathering the storm caused by the FTX bankruptcy, the platform has made an impressive recovery. Its technology, which enables rapid and reliable decentralized applications and cryptocurrency services, continues to captivate the market. This allure, coupled with the platform’s promising performance, has piqued the interest of investors 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.
Featured image from iStock, chart from TradingView.com
