Undoubtedly, investors have seized the opportunity presented by the oversold signal from Solana, leading to a significant surge in its trading volume by almost 60%. This surge initiated a strong green candlestick, causing SOL to spike by an impressive 9% in a single day, reclaiming the $200 mark – a level it hadn’t reached in a week.
Currently, there is much speculation with many anticipating a potential rally towards $220 in the near future. Let’s analyze the possibilities.
Investor Confidence in Solana Needs to Increase
As of the time of writing, Solana was trading 20% above its previous low of $168, with a neutral RSI and the MACD showing signs of turning bullish – indicating there is still ample room for momentum to gather.
Across the broader market, high-cap altcoins have been experiencing fresh capital inflows, although none have managed to break significant resistance levels with the exception of XRP, which surged past its November peak.
For Solana to reach $220, it must climb by another 10%, a target that appears feasible in the short term. Nonetheless, despite its recent recovery, the erratic price movements of SOL have underscored a crucial issue – investors are still lacking sustained confidence.
With a 30% surge required from its recent low to achieve that target, concerns over profit-taking could arise, particularly if traders opt to cash out prematurely.
Furthermore, the trading volume for the SOL/BTC pair stood at 166.46K, a stark contrast to XRP/BTC’s 55 million. Evidently, investors appear to be shifting their attention to other alternative coins in this cycle.
However, There Could Still be Hope…
With the cryptocurrency market gearing up for a potential bullish rally ahead of Trump’s inauguration, it is anticipated that fresh capital will flow in. For Solana to attract this influx, it must maintain the $200 threshold – a level that could trigger FOMO (fear of missing out) and entice investors to join in.
The Futures market is already indicating signs of this change, with volume increasing by 49.61%, and Open Interest (OI) hovering just 4% below its all-time high of $6.68 billion – aligning well with Solana’s peak in mid-November at $264. Maintaining the $200 level is now vital to avoid a potential long squeeze.
While a 10% surge for Solana seems achievable, it is likely to be predominantly influenced by broader market dynamics. Given the fragile nature of investor confidence, a sustained rally is not guaranteed. Many traders may choose to exit early, enticed by the possibility of a tempting 30% profit. Therefore, expect some volatility as Solana approaches critical levels.