SOL, the native token of the Solana layer 1 blockchain began a recovery on Jan. 23, rising by 28% to reclaim the $100 level. As SOL displays strength, the sustained recovery is backed by increasing network activity.
On-chain data shows activity on the Solana blockchain has exploded in recent days, fueled by growing enthusiasm around the ecosystem and speculation that the price of SOL will continue its upward trajectory.
This growing interest appears to be tied to the impending airdrops of tokens within the system. Among these is the upcoming launch of Jupiter (JUP), a new token for the Solana-based decentralized exchange (DEX) aggregator, Jupiter.
In anticipation of this, users are transferring their funds to Solana as they get ready for the airdrops. Data from Wormhole scan shows the effect of “airdrop” season and Solana’s highly anticipated WEN token, as the altcoin has been attracting liquidity over the last 30 days, with over $308 million moved through Wormhole.
Funds moved to Solana. Source wormholescan.io
More data indicates that trading volumes on Solana DEXes remain at $853.17 million over the past 24 hours, though they still trail Ethereum volumes of $1.223 billion over the same period.
A range of other on-chain metrics also showcase heightened activity, including nearly 750,000 new Solana wallets created last Friday alone, an all-time high.
— Felixio (@ethfelixx) January 30, 2024
The expanding network capacity and developers building aggressively on the blockchain suggest that Solana could soon revisit its former all-time high price record of around $260.
Solana seeks to complete V-shaped recovery before scaling higher
After reaching a 20-month high of $126 on Dec. 25, 2023, SOL price pulled back as sellers booked profits and the wider crypto market corrected. This was followed by a sharp recovery with the layer 1 token rising nearly 30% from $78 to the current price of $101.
This uptick saw Solana flip key levels into support including the 50-day exponential moving average that was sitting at $87 and the psychological level at $100. The bulls will now push the price toward the $106 local high to complete the V-shaped recovery.
If this happens, the price will rise first toward $120 before returning to the range high at $126. Such a move would represent a 25% ascent from the current levels.
SOL/USD daily chart. Source: TradingView
This positive outlook was supported by the upward-facing moving averages. The position of the stochastic RSI at 98 suggested that the price was firmly in the hands of the buyers.
On the downside, the stochastic RSI shows SOL is massively overbought. As such, the on-going recovery could soon run out of steam as profit-booking on the latest rally kicks in.
As such, Solana may drop from the current levels with the first line of defense arising from the $100 level. Additional lines of support could emerge from the 50-day EMA at 90 and the 100-day EMA at 79.