The previous week has been a crucial period for Solana [SOL], as it successfully breached the $160 resistance level after several attempts, marking the end of a downward trend that lasted for two months.
Despite experiencing a sudden 6% decline in one trading session a couple of days ago, SOL bulls managed to maintain support around the $175 mark, preventing any further decline.
With growing liquidity driven by upcoming elections, Solana appears primed to achieve $185 and potentially surge towards $200 if it manages to establish strong support above the $160 level.
Anticipation Builds Up Ahead of Elections
During the previous presidential election, Bitcoin broke out of a long consolidation phase and crossed the $40K mark for the first time about two months later.
This aligns with a common trend where low-risk assets tend to attract significant interest, particularly in periods when market stability is uncertain due to election-related factors.
Hence, investors are looking forward to a post-election rally as they adapt to new market dynamics and expand their portfolios to include high-cap altcoins for better returns.
The current market sentiment suggests a pre-election buildup, indicating that investors are positioning themselves to capitalize on the potential returns offered by low-risk assets like Solana, as depicted in the accompanying chart.
Over the past three days, there has been a notable resurgence in USDT inflows, with more than $28 million in Tether deposited into exchanges. This uptick comes after a significant outflow of $200 million in USDT tokens just five days earlier.
Historically, increased USDT inflows often precede Bitcoin hitting daily highs. Consequently, analysts are optimistic about Solana’s prospects, especially considering its outperformance compared to other leading altcoins in the previous cycle.
Potential Scenario for Solana Bulls
Having recorded a weekly gain exceeding 5%, Solana has broken free from its two-month slump and surpassed the $170 mark, a level it had last touched back in July, while many other altcoins are struggling in negative territory.
Currently priced at $176 and witnessing a 22% surge in trading volume over the past 24 hours, there are indications of a potential overbought situation, as the current price nears its highest point in two weeks, hinting at a possible reversal in trend.
Nevertheless, if bullish investors see the rising election-related liquidity as a trigger for a bullish trend in November, there is a good chance that Solana could withstand this pressure with strong investor support entering the market.
If this scenario unfolds as expected, traders might easily propel Solana towards the next target of $185, particularly as major altcoin Ethereum faces challenges with its network health, an area where Solana has shown strength.
In essence, the market conditions are favorable for Solana to achieve its short-term price target, driven by a shift of funds into high-cap tokens amid increasing volatility due to the pre-election sentiment and SOL’s dominance within the altcoin space.