Solana’s recent price performance has been remarkable. It surpassed Ripple and Binance Coin to become the fourth-largest cryptocurrency by market capitalization. SOL price broke the critical level of $100 for the first time since April 2022 over the weekend, sparking optimism among investors. However, altcoins suffered a correction of about 7%, suggesting that the market was overheated. At the time of writing, the ‘Ethereum killer’ was trading slightly lower at $111.60.
SOL outlook
The price of Solana has shown significant recovery over the past few weeks and has surpassed the psychological level of $100. The altcoin has been one of the best-performing assets this year, posting more gains in the past month alone, taking its year-to-date gain to over 1,025%. However, despite this growth, analysts say Solana’s chances of surpassing ATH of $260 are bleak.
This is because supply increases relative to value. When Solana’s price hit an all-time high of $260 in November 2021, Solana’s total market capitalization was approximately $78 billion. Despite the cryptocurrency asset being worth less than half of its peak value, its market capitalization is currently approaching $50 billion.
This follows an increase in Solana supply of over 100 million SOL over the past two years. According to some analysts, for the altcoin to retest $260, its overall market cap would need to be around $111 billion, which seems rather difficult with institutional investors pouring billions of dollars into the asset.
SOL’s recent surge has been fueled by significant on-chain activity. The ongoing hype about the blockchain’s fast transactions and low fees has fueled SOL’s on-chain activity. Cryptocurrency markets have also been on the rise over the past few weeks due to the weakening US dollar and the January 10, 2024 deadline for the first approval of a spot Bitcoin ETF.
Solana price outlook
Solana price has shown a strong upward trend over the past few weeks despite facing strong rejection at the important resistance level of $120. The digital asset remains above the 50-day and 200-day exponential moving averages and the 100-day and 200-day simple moving averages. The relative strength index (RSI) is 74, indicating that the asset is overbought due to its recent uptrend.
So the market will likely have to cool down before it can resume its rally. Moreover, the bullish momentum, characterized by the retreating green bars of the Moving Average Convergence Divergence (MACD) indicator, is currently waning.
Therefore, Solana price may experience a correction below $100 until the market cools down, after which it will gather strength to resume the rebound. On the other hand, if the bulls continue to charge the altcoin, Solana could reverse immediate resistance to $120, adding confidence to the current market position.
SOL price chart