Solana’s Remarkable Surge
Solana, a cryptocurrency, has experienced an impressive surge, with its price rising by 40% in the past week. This surge has led to a new high for the year 2023, with Solana’s value reaching approximately $58.
This performance marks Solana’s strongest weekly showing since January of the same year.
Factors Contributing to the Gains
Several factors have contributed to these gains, driven in part by a broader uptrend in the cryptocurrency market. The excitement surrounding Bitcoin ETFs and an increasing appetite for risk among investors have played a significant role.
Interestingly, Solana’s recent ascent coincides with a daily selling of 250,000 to 750,000 SOL tokens by the FTX bankruptcy estate over the last two weeks.
This selling activity follows the approval by the Delaware Bankruptcy Court in September 2023 to sell 55.75 million SOL tokens.
Concerns initially surrounded these sales, but their limited impact, thanks to some tokens being vested or locked, along with a weekly sale limit of $100 million, have shifted investor sentiment from fear to enthusiasm.
Institutional Interest and Positive Momentum
The positive momentum in Solana has also been reflected in Solana-focused funds, which serve as an indicator of institutional interest in the SOL market.
These funds have seen inflows totaling $10.80 million during the week ending on November 3, according to CoinShares.
The overall bullish trend in cryptocurrency prices, driven by Bitcoin’s ascent toward $38,000, has been further amplified by Solana’s exceptional performance over the past 30 days.
Solana’s Futures and Market Dynamics
Solana’s futures open interest has surged to approximately $772 million on November 11, the highest level since November 2021 when SOL reached its all-time high of $260.
This rise in open interest signals a heightened level of interest and potentially increased liquidity in the market.
Moreover, Solana’s rising open interest coincides with an uptick in funding rates, indicating a preference for leveraged long positions among investors.
The funding rate for SOL recently reached 0.035% per eight hours, equating to a weekly cost of 0.735% for leveraged longs, reflecting a strong bullish sentiment in the market.
Future Outlook and Potential Correction
In summary, Solana’s recent price gains are part of a larger bullish breakout movement.
Notably, SOL broke above the horizontal trendline resistance of its ascending triangle channel two weeks ago.
If this bullish pattern continues to play out, Solana’s price could target approximately $90 by the end of the year, representing a 50% increase from its current levels.
However, it’s important to note that the relative strength indicator (RSI) has reached its most overbought level since September 2021, suggesting a potential correction in the market, with a possible correction target near the triangle’s upper trendline around $30.
