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Solana price performance in recent times has been remarkable, surpassing Ripple and Binance Coin to become the fourth-largest cryptocurrency by market cap. The SOL price breached the critical level of $100 for the first time since April 2022 over the weekend to imbue optimism among investors. However, the altcoin has corrected by 7%, suggesting that the market is overheated. At the time of writing, the ‘Ethereum killer’ was trading slightly lower at $111.60.
SOL Outlook
Solana price has made a significant recovery over the past few weeks, climbing above the psychological level of $100. The altcoin has been one of the best-performing assets this year, extending its year-to-date gains to more than 1,025%, with more gains recorded in the past month alone. However, even with such growth, analysts have noted that Solana has a bleak chance of topping its ATH of $260.
The reason behind this is the increase in supply relative to its value. In November 2021, when the Solana price hit its all-time high of $260, its total market capitalization was around $78 billion. Despite the value of the crypto asset being less than half of what it was at the top, its market cap is currently hovering near $50 billion.
This has been brought about by the increase in the Solana supply by more than 100 million SOL over the past two years. According to some analysts, for the altcoin to retest $260, its total market cap would have to be around $111 billion, which seems rather difficult with institutional investors pouring billions into the asset.
SOL’s recent surge has been on the back of substantial on-chain activity. The ongoing hype for the blockchain’s speedy transactions and cheap fees has buoyed SOL’s on-chain activity. Additionally, the crypto market has been in the green over the past few weeks, boosted by a weaker US dollar and the potential deadline for the first approval of a spot Bitcoin ETF on January 10, 2024.
Solana Price Outlook
Solana price has been on a strong bullish trajectory over the past few weeks, despite facing a 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. Its Relative Strength Index (RSI) stands at 74, indicating that the asset is overbought due to its recent rally.
As such, the market would have to cool down before resuming its rally. Furthermore, its bullish momentum is waning right now, characterized by the receding green bars of the Moving Average Convergence Divergence (MACD) indicator.
Therefore, Solana price could experience a correction to $100 or lower until the market cools down, after which it would gather the strength to resume its rally. On the other hand, if the bulls continue to charge the altcoin, Solana could flip the immediate resistance at $120, adding confidence to its current market position.
SOL Price Chart
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