Solana eyes $600 target in upcoming crypto surge
YASHU GOLA
FEB 28, 2024
Solana eyes $600 target in upcoming crypto surge
In recent quarters, Solana's increasing on-chain activity points to a strong underlying demand for SOL tokens.
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Solana (SOL) looks poised to undergo a bull run in the current crypto market boom led by Bitcoin (BTC), argues independent market analyst Hansolar.
SOL price could reach $600
At the core of Hansolar’s bullish analogy for Solana is its potential to replicate Ether’s (ETH) price trends during the previous crypto market bull runs. For instance, in the 2020-2021 bullish cycle, ETH’s price surged from around $85 to as much as $4,935, tailing Bitcoin’s uptrend.
Interestingly, ETH’s uptrend increased by approximately 1,400% after Bitcoin established a new record high above $20,000, as shown in the three-day chart below.
BTC/USD vs. ETH/USD three-day price performance chart. Source. TradingView
This fractal could repeat in 2024 as Bitcoin pursues an extended bull run above its November 2021 record high of $69,000. Nonetheless, as Hansolar argues, Bitcoin refreshing its all-time high could benefit Solana equally this time.
"Previously, ETH took off when BTC actually broke out into ATHs. It's then when retail buys into SOL as the high beta catch up play," he stated, adding:
"Currently SOL is at around 50% from ATHs similarly to how ETH was around the 50% mark as BTC was nearing ATHs in the previous cycle."
BTC/USD vs. ETH/USD and SOL/USD three-day price performance chart. Source: TradingView
That said, Bitcoin's run-up toward $150,000, a valuation predicted by Fundstrat's Head of Research Tom Lee on ETF approval prospects, could have Solana target $600 as its long-term upside target. That is nearly 450% above the current SOL price.
Do Solana fundamentals support bullish SOL predictions?
Fundamentally, Solana has fared well in terms of network adoption recently, with the total-value-locked (TVL) across its ecosystem at 20.51 million SOL, its highest level since January 2023.
Solana TVL performance chart. Source: Defi Llama
Theoretically, as more assets are locked into DeFi platforms, the circulating supply of these tokens may decrease, leading to a potential increase in demand relative to supply. This scarcity effect can contribute to price appreciation of the locked tokens.
Read more: Why Solana will prevail despite Ethereum ETFs
Solana’s rising TVL appears synchronous to its sustained quarter-over-quarter (QoQ) growth tracked by the data resource platform Messari.
Notably, the network’s average daily fee payers during Q4/2023 surged 103%. In the same period, its average daily DEX (Decentralized Exchange) volume rose by 961%, with a 359% increase in average daily NFT (nonfungible token) volume.
Solana network usage overview by the end of 2023. Source: Messari
In Q1/2024, the airdrop of Jupiter DEX’s native token, JUP, also spurred on-chain activity atop the Solana blockchain. Also, its NFT volumes peaked near $5 billion, underscoring a strong underlying demand for SOL tokens.
Solana technical analysis
In the near-term, Solana eyes $200 as its primary upside target due to the formation of a bullish continuation pattern on its daily chart.
Dubbed bull pennant, the pattern develops when the price consolidates inside a symmetrical triangle structure after a strong move upward. Meanwhile, it resolves after the price breaks above the upper trendline and rises by as much as the height of the previous uptrend.
As of Feb. 28, SOL’s price was testing the pennant’s upper trendline for a potential breakout. If that happens, the price could rise toward $200 during March, up approximately 75% from the current price levels.
SOL/USD daily price chart. Source: TradingView
Conversely, a breakdown below the pennant’s lower trendline risks invalidating the bullish setup altogether. Should it happen, SOL’s price can drop by as much as the previous upside move, i.e., toward $60.75, down circa 45% from current price levels.
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Long squeeze alert: BTC and ETH could retrace to these levels
Long squeeze alert: BTC and ETH could retrace to these levels
Vinicius Barbosa
Vinicius Barbosa
CRYPTOCURRENCY
Mar 2, 2024
In a rallying cryptocurrency landscape, each pump and opened long position leave liquidity pools behind, which can cause long squeezes. Therefore, traders can look for cryptocurrencies with an increased volume of longs to prepare for retracements.
Finbold gathered data from CoinGlass on March 2 to analyze the derivatives market. Cryptocurrencies have shifted to a dominating bullish sentiment amid a notable rally. In particular, Bitcoin (BTC) and Ethereum (ETH) accumulated massive gains and now threaten a correction.
Essentially, traders tend to open longs when the market is going up while favoring short positions when it goes down. However, longs are trading contracts that require deposited collateral, setting a liquidation price downwards.
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If this liquidation price is reached, the contract closes and liquidates the trader’s position, selling the collateral. This might drive prices further down, liquidating more trading contracts in a cascade effect called a long squeeze.
Thus, market makers can use high liquidity pools as targets to increase volatility and their profits.
Long squeeze alert for Bitcoin (BTC) at $50,000
Interestingly, Bitcoin accumulated relevant long liquidations in the $50,000 zone, which plays an important psychological support and resistance.
The monthly chart shows eight liquidity pools with over $1 billion each, from $50,700 to $49,700. At least half of them have over $2 billion worth of long liquidations, up to over $12 billion in total.
Nevertheless, there are smaller liquidity pools to the upside, with a candle wick at $64,300. Professional traders could use this wick for one more impulse seeking to attract more liquidity to the $50,000 zone before moving to a long squeeze.
BTC 1-month liquidation heatmap. Source: CoinGlass
Ethereum could soon retrace to $2,400
On the other hand, Ethereum has even larger liquidity pools to the downside from February’s historical perspective. These pools point to a possible long squeeze down to $2,400, meanwhile liquidating many traders at previous levels.
Like Bitcoin, ETH could first visit the local top at around $3,500 to accumulate more long liquidations before the bigger move.
ETH 1-month liquidation heatmap. Source: CoinGlass
Conclusion
In summary, Bitcoin and Ethereum could soon retrace to lower levels in a correction movement following the recent rally. A long squeeze could cause 18% and 29% losses from their current prices at $61,000 and $3,400, respectively.
Notably, these are historically common retracements in the highly volatile cryptocurrency market during bull runs.
Still, the two cryptocurrencies could see a brief pump to their local top before moving down, or the derivatives market could shift entirely in the following weeks – eliminating this reported long squeeze treat.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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