The price of Solana’s SOL token ran into resistance at $110 on Jan. 11, followed by a 27%correction to a five-week low at $78.80 on Jan. 23.
SOL has since recovered some of these gains rebounding by 12% in less than three days and put a temporary end to the bearish price action.
Traders are now questioning whether the recovery was backed by solid fundamentals and whether SOL can push back above $100.
Solana network upgrade back SOL’s upside
Solana’s bullish potential is fueled by the upgrades expected within the network’s ecosystem. This includes the recently launched “token extensions” on the Solana network, which allow transfers to be made permanently hiding balances, transfering hooks for gated access, and the ability to charge fees at the protocol level.
These updates were included in the v.1.17 release of the Solana Labs validator client announced on Jan. 19.
The plug-and-play functionalities are designed for enterprise applications and regulator-friendly resources.
Another upgrade to the network is Firedancer, a promising new third-party validator client currently under development. This is a solution by Jump Crypto aimed at increasing Solana’s processing capabilities toward millions of transactions per second and provide support for parallel processing (sharding).
A post on the X social network by user R89 highlights how Solana’s network stability has changed after multiple failures in 2022.
Solana sustained its performance throughout 2023, while some of its competitors, including Ethereum layer-2 scaling solutions such as Arbitrum, dealt with outages amid a surge for blockchain space.
This points to increasing reliability which saw a wave of Solana SPL token airdrops to reach centralized exchanges marked by Jito’s JTO staking solution and the BONK memecoin in December 2023.
This increased demand for SOL tokens as users rushed to take part in the multiple airdrops, some confirmed and others purely speculated on, adding credence to its upside.
Solana price analysis
Solana is trading above a multi-month ascending trendline that has provided support for the layer 1 token. At the time of writing, SOL was trading at $87.9 as the trendline provides immediate support.
A daily candlestick close above this support line could push the price above the 50-day exponential moving average (EMA) at $88. Such a move would bolster the bulls to push the price toward the $100 psychological level.
SOL/USD daily chart. Source: TradingView
On the other hand, the RSI is moving within the negative region at 45 suggesting that the bears still have the upper hand. As such, the downturn may continue with the 100-day EMa at $73 and the 200-day EMA at $56 being the key levels on watch on the downside.