This week saw Solana [SOL] experience a significant increase of about 10%, bringing it in proximity to the crucial $160 resistance level – a level that has posed challenges, with four rejections witnessed over the past three months.
All focus is now on SOL, as a clear breakthrough above $160 could pave the way for a rally towards the coveted $200 milestone.
Understanding the Significance of $160
Since late July, Solana has been oscillating within a narrow range of $110 to $160, post its close near $190. Despite Bitcoin’s two bullish cycles in this duration propelling it beyond $66K, SOL has experienced minimal capital inflow.
Despite the resilience shown by the bulls, preventing SOL from plummeting to a new local low, this persistence might not suffice to trigger an imminent breakout.
To initiate a significant move, SOL must break out of this consolidation by surpassing the $160 resistance.
The nearly 10% weekly surge contributes to the positive sentiment, particularly given SOL’s outperformance compared to many other top alternative coins.
This has led analysts at CryptoCrypto to ponder: could investors be considering a shift of funds from BTC to SOL? If such a move materializes, Solana could witness a substantial surge.
Emerging Interest in SOL with a Minor Dilemma
Being promoted as an “Ethereum killer,” Solana has implemented a mechanism capable of achieving faster transactions, currently processing over 3,000 TPS.
Following a turbulent conclusion to the September cycle, characterized by a notable decline in active wallet count from nearly half a million to 800,000 within a brief span of two weeks, October has ushered in a surge in liquidity.
During this period, active wallets hit an all-time high.
Despite these achievements, SOL’s price has not reacted as anticipated. One potential reasoning could be the absence of aggressive accumulation by traders, who possibly do not perceive the current price as a potential bottom.
If this pattern persists, the possibility of a rebound could diminish, marking the fifth consecutive instance the $160 resistance remains unchallenged.
A report from CryptoCrypto highlighted the increased activity in the futures market, with open interest (OI) witnessing a significant rise to $2.45 billion, setting a bullish tone for SOL.
However, this trend also poses a challenge, rendering SOL more susceptible to sudden derivative fluctuations that could wipe out the gains accrued over the past week as liquidations are triggered.
In conclusion, SOL finds itself at a critical juncture. While the recent bullish momentum has maintained SOL in positive territory, a potential retracement and consolidation phase may be on the horizon.
This probable pullback is primarily due to the lack of aggressive buying from investors, who appear hesitant to perceive the current price levels as an appealing entry point. Therefore, prudence is advised.