Solana picks up speed: Crypto Analysis of February 29, 2024

Solana has recovered from its last correction of approximately -35%. Let’s examine the upcoming outlook for the price of SOL.

Current State of Solana (SOL)

As mentioned in the analysis of January 18, 2024, Solana recently underwent a correction phase. This phase hit a low at $82, which was the level from which the cryptocurrency bounced back, later regaining its last peak. Indeed, SOL recorded a rise of more than 57% in a month. It’s interesting to note that this rebound corresponds to the 38.2% Fibonacci retracement level taken from $21.

As of the time these lines are written, Solana is trading around $130 and seems ready to break through its last peak to reach the 50% Fibonacci level, calculated from its all-time high. Consequently, SOL is maintaining above its 50 and 200-day moving averages, which reassures the idea that the cryptocurrency is in an uptrend. Naturally, oscillators such as RSI and MACD have bounced back and are lately established above their median threshold. This indicates a bullish momentum that seems to be resurfacing. 

Current technical analysis has been conducted in collaboration with Elie FT, an investor and trader passionate about the cryptocurrency market. Today, he is a trainer at Family Trading, a community of thousands of proprietary traders active since 2017. Here you will find Live sessions, educational content, and peer support around financial markets in a professional and warm atmosphere.

Focus on Solana’s Derivatives (SOLUSDT)

One can observe that the open interest of SOL/USDT perpetual contracts has increased in parallel with its price, accompanied by a positive funding rate and predominantly sell-side liquidations. All these elements suggest that the speculative interest of traders is mainly directed towards buying. However, it’s important to point out that the significant positive funding rate indicates that the price of the SOL/USDT perpetual contract is higher than the SOL spot market price. This discrepancy might reflect increased optimism in the derivatives market, especially those related to Solana. As positive as this may seem, a too-high funding rate over an extended period can also indicate that the market is in an overbought period. Therefore, a balance is desirable for a healthy continuation of the trend.

The liquidation heatmap for the SOL/USDT pair over the past three months shows that the cryptocurrency has recently bounced back from a significant liquidation area located just below the $100 threshold. Currently, the most significant liquidation zone appears to be below its current price, more precisely, around $92. If the price approaches these levels, it could trigger orders massively, thus increasing the risk of a period of heightened volatility for Solana. This area represents a crucial point of interest for investors.

Possible Scenarios for the Price of Solana (SOL)

• If the price of Solana manages to hold above $90, we could anticipate a new rise up to the threshold of $137 or even $160. The next resistance to consider, if the upward movement continues, would be $200. At this stage, it would represent a rise close to +50%.

• If the price of Solana fails to hold above $90, we could envisage a return to $80. The next support to consider, if the downward trend continues, would be around $70 or even $60. At this stage, it would represent a drop close to -54%.

Conclusion

Solana has gotten back on track and seems ready to reignite the rally that has significantly driven it upwards since October 2023. However, speculative interest associated with this cryptocurrency is highly marked. While this can be perceived positively in terms of investor sentiment, it can paradoxically make its price more vulnerable in the short term. Therefore, it will be crucial to closely observe the price’s reaction to various key levels to confirm or invalidate the current hypotheses. It is also important to remain vigilant against potential market “fake outs” and “squeezes” in each scenario. Lastly, let us remember that these analyses are based solely on technical criteria and that the price of cryptocurrencies can also move rapidly due to other more fundamental factors.