- Analysts predicted a significant increase in the price of SOL.
- Meme coin activity on the network has led to high demand for the token.
With just a few days to go until January ends, the price of Solana [SOL] started to gain steam again. At the time of writing, SOL’s price was $96.61. This value was responsible for an increase of 7.38% in seven days.
But for some analysts like Ali Martinez, SOL could be prepared to climb much higher in the coming days.
The correction season is over
According to Martinez, Solana’s native token broke out of a descending channel. He also said that if SOL holds above $94, its value could rise to $113 in the near term.
#Solana appears to emerge from a descending parallel channel. If $SOL can hold above $94, it has a high chance of heading towards $113! pic.twitter.com/cNdS6GeXXK
— Ali (@ali_charts) January 28, 2024
A descending channel is created when a trendline connects the lower highs and lower lows of an asset’s price.
As shown above, these trend lines run parallel to each other, with one indicating resistance and the other supporting levels.
Normally the chart is bearish. But the value can be very high when it comes to a cryptocurrency breaks from the pattern.
When the year started, the price of SOL was around $100. But on January 2, its value increased and by the end of the said date, the token changed hands at $116.
However, a broader market correction meant the rise didn’t last long, and the SOL fell to $79 on January 23.
In the current market conditions, AMBCrypto found that demand for SOL has increased.
If it continues, the price could end the month higher than it started. A few weeks ago we reported how the stablecoin volume on Solana had increased.
When this happens, it means there is high network activity.
It also implies that market participants are actively involved in trading tokens built under a blockchain. For Solana, meme coin trading was the main reason this volume soared.
“WEN” does it stop?
Using data from DEXScreener, we noticed that many Solana users were actively buying memes. And these meme coins don’t include the more popular coins like Bonk [BONK] and dog hat [WIF].
GameStop for example [GME]a recently created meme coin, had risen to a market cap of $9.2 million.
Source: DEXScreener
Another meme that increased demand for SOL was WEN. At the time of writing, WEN’s market capitalization had risen to $142 million. But this token wasn’t a regular token that degenerates flocked to.
Instead, the token was introduced as the first cryptocurrency deployed on Jupiter’s launch pad. For context, Jupiter is the largest Solana-based decentralized exchange (DEX).
Additionally, more than one million Solana wallets received 643,652 WEN tokens each to “celebrate” the launch. At launch, WEN’s market capitalization was just over $55 million.
So the recent surge meant that more users were buying the token.
Should this continue, SOL may have no choice but to rise above $96 before January 31.
New players find safety in Solana
However, another analyst Michaël van de Poppe shared Martinez’s opinion. But Van de Poppe seemed more optimistic than the first.
According to him, SOL could continue on an upward trend. But instead of stopping at $113, the value could rise towards $140.
#Solana is ready for an upward continuation here.
After the initial upward movement there is always a period of consolidation, and it appears that this has come to an end.
A higher timeframe support test at $80 provided support.
It seems likely that we will head towards $140. pic.twitter.com/5DRQaRhbZh
— Michaël van de Poppe (@CryptoMichNL) January 28, 2024
In addition to the prize promotion, new participants have flocked to the Solana network and registered.
As a result, data comes from The Block showed that the blockchain recorded the highest influx of new addresses since its launch.
Source: Het Blok
The above diagram indicated that many of the addresses interacted with SOL. Furthermore, the metric is a function of user adoption, confirming that Solana was one of the networks with this highest traction lately.
Additionally, AMBCrypto monitored SOL’s price action on the daily time frame. According to the SOL/USD 1D pair, the price seemed to be heading towards $120.
At the time of writing, SOL’s value had reversed both the 9 (blue) and 20 (yellow) EMAs. When If this happens, it suggests that the cryptocurrency has great potential to trade higher.
Is the coast getting clearer?
If bulls push the SOL to break above the USD 100.15 resistance, the token could add another 20%. But that would also depend on the bulls’ ability to defend it.
Should SOL fall below $89.69, the price could drop to $80.
However, signals shown at press time did not support a nosedive. For example, the Aroon Down (blue) showed a downward trend despite being at 57.14%. This was a sign that sellers were becoming weak.
The Aroon Up (orange) at press time was 21.43%. Although the price was lower than the opposite number, it looked like the indicator would send the SOL higher than $100.
Another indicator supporting the potential upside was the Relative Strength Index (RSI).
At the time of writing, the RSI value has risen to 53.71. The trend also showed that SOL had broken the negative divergence. If the bulls maintain the momentum, the token value could reach $105 to begin with.
Moreover, the Directional Movement Index (DM) showed that buyers and sellers were still in a heated battle. At the time of writing, the +DMI (green) was 22.25, while the -DMI (red) was 21.30.
This closeness was proof that the coast was no longer safe for either side.
Source: TradingView
Is your portfolio green? Check the Solana profit calculator
However, the direction SOL ultimately goes may depend on the Average Directional Index (ADX). Should the ADX (yellow) rise above 25, this could provide support for a strong directional move.
But if the ADX remains lower, it could be difficult for SOL to rise.