The world of cryptocurrencies is abuzz with the recent surge in the price of Solana (SOL), which has skyrocketed by a remarkable 40% this week, reaching a new high for 2023 at around $58. This surge marks Solana’s best weekly performance since January 2023, leaving investors both excited and skeptical about its future prospects.
Solana’s price surge can be attributed to various factors, most notably the overall uptrend in the cryptocurrency market. The recent anticipation and euphoria surrounding the approval of a Bitcoin ETF have sparked a frenzy in the market, leading to a growing appetite for risk among investors. As a result, Solana, being one of the top-performing cryptocurrencies in the past 30 days, has benefitted immensely from this market trend.
Coinciding with Solana’s rise, the FTX bankruptcy estate has been selling a daily volume of 250,000-750,000 SOL tokens over the past two weeks. Initially, there were concerns about the potential impact of these sales on the market. However, the limited impact caused by some tokens being vested or locked, coupled with a weekly sale limit of $100 million, has transformed these concerns into investor enthusiasm. Solana-focused funds have witnessed significant inflows worth $10.80 million in the week ending November 3, as reported by CoinShares, reflecting growing institutional interest in the SOL market.
Solana’s futures open interest has reached a remarkable level of approximately $772 million on November 11, the highest since November 2021 when the price of SOL reached its record high of $260. Such high levels of open interest indicate a growing interest and potentially greater liquidity in the market. Additionally, increasing funding rates, which represents a fee paid by one side of the perpetual contracts to the other every 8 hours, further contribute to the bullish sentiment surrounding SOL. A positive funding rate indicates a dominance of long positions, suggesting a strong bullish sentiment in the market.
The surge in Solana’s price this week appears to be part of a bullish breakout, with the price breaking above the horizontal trendline resistance of its ascending triangle channel two weeks ago. This breakout has set the stage for further price appreciation, with an upside target for SOL price expected to reach around $90 before the end of the year, representing a 50% increase from current levels. However, it is important to note that the Weekly Relative Strength Indicator (RSI) is currently at its most overbought level since September 2021. This indicates a high risk of correction, with the possibility of a correction towards the upper trendline of the triangle at around $30.
Solana’s remarkable rise in price has captured the attention of both cryptocurrency enthusiasts and institutional investors. The combination of market uptrend, the impact of FTX bankruptcy estate sales, and the increasing futures open interest and funding rates have all contributed to its recent surge. While predictions of further price appreciation are optimistic, it is equally important to exercise caution due to the potential for a correction in the near future. As the cryptocurrency market continues to evolve, Solana’s performance will undoubtedly remain an area of great interest and speculation.