In the past week, SOL prices have risen by more than 52%, hitting $118 for the first time in 18 months.

Why is the SOL price rising?

The SOL price increase coincides with rising gas fees in the ecosystem of rival Layer 1 blockchain Ethereum.

Ethereum gas fees are down more than 50% from their weekly highs. However, periods of flash growth have prompted users to explore alternative blockchain platforms with lower transaction costs. The increase in user activity over the past few months may have had a positive impact on SOL prices.

For example, according to Messari, the number of active addresses on Solana has increased by nearly 400% in the past three months, while the number of active addresses on Ethereum has only increased by 3%.

As of now, the number of new addresses in December has also set a record of 6.8 million, and the previous record was 6.6 million set in May 2023.

The number of Solana active addresses increased by about 50% from November to more than 15.6 million, higher than the record of 15.2 million set in January this year.

Airdrop Solana increases user activity

Of course, the recent airdrops on the Solana blockchain, especially the memecoin Bonk, are the main reason for the surge in daily active addresses and price. In addition, Solana’s decentralized exchange (DEX) volume rose to the top this week.

Solana Attracts Institutional Capital

Notably, investment funds on Solana attracted $10.6 million in the week ending December 16, surpassing the capital inflows of top competitors such as Bitcoin and ETH. In December, Solana funds received $14.1 million in inflows, the highest in the cryptocurrency space.

SOL Price Technical Analysis

However, technical indicators suggest that SOL's price increases this week may be about to pause.

For example, on the 3-day chart, SOL price has formed higher highs, but its relative strength index (RSI) and volume have created lower highs. Technically, this gap shows that the bearish divergence is expanding, indicating an impending sell-off.

If the bears gain the upper hand, the price of SOL could drop to the 0.382 Fib near $100 in 2024. A decisive close below $100 could drop the price to the 0.236 Fib near $66.

Conversely, a close above the 0.5 Fib level around $130 could push the price towards the 0.618 Fib level around $157.50.

(Personal opinion, not a recommendation)

In the crypto industry, if you want to seize the next bull market opportunity, you need to have a high-quality circle so that everyone can keep each other warm and maintain insight. If you are alone, looking around and finding no one, it is actually very difficult to persist in this industry.

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