Solana ($SOL ) has been making headlines after a strong price surge of almost 10% over the past 24 hours, following the U.S. Federal Reserve’s decision to cut interest rates by 50 basis points. This rate reduction, lowering the federal funds rate to 4.75%-5%, appears to be fueling optimism across the broader crypto market, including Solana, as the asset now targets a key resistance level of $140 for the first time in September.
🔮 Impact of the Federal Reserve's Rate Cut on Crypto
While the rate cut by the Fed was widely anticipated, the markets responded positively, largely thanks to the dovish tone struck by Fed Chair Jerome Powell. Powell emphasized that the economy continues to show "solid" growth, with inflation trending down and the labor market remaining strong. This optimistic outlook, coupled with the Fed’s decision to ease monetary policy, provided a welcome boost to risk assets like cryptocurrencies.
No Bitcoin, which has a strong influence on the broader crypto market, also reacted favorably to the news, and its positive correlation with Solana helped push SOL’s price higher. Solana’s 90-day rolling correlation with Bitcoin stands at 0.74, meaning that when Bitcoin rises, Solana often follows suit. The broader market optimism from Bitcoin’s reaction to the Fed’s announcement is a driving force behind Solana’s recent surge.
🔮SOL Price Eyes a $140 Breakout
As of now, Solana’s price is hovering near $140, a key resistance level that traders have been closely watching. If SOL can break above this barrier, it could set the stage for further gains, with analysts eyeing an immediate target of $160. This would represent a 16% increase from current levels.
Technical indicators also suggest favorable conditions for further upward momentum. On the 4-hour chart, Solana has managed to maintain a bullish position above the 200-day EMA (Exponential Moving Average), a key technical level that typically indicates strong support. If Solana can close above the 200-day EMA on the daily chart, it would further strengthen the bullish case, confirming a potential breakout to new highs.
🔮Futures Traders Fuel the Rally
Another factor contributing to Solana’s recent price rally is the increasing interest from futures traders. The SOL funding rate, which reflects the cost of holding long positions in futures contracts, hit a two-month high of 0.0107. This jump in the funding rate coincided with the recent 4% price increase on September 19, signaling that more traders are betting on Solana’s price continuing to rise.
The last time a similar spike in the funding rate occurred was in July, which led to a substantial 43% price rally for Solana, moving from $134 to $193. If history repeats itself, we could see another significant upside move as futures traders continue to go long.
🔮Key Support at $127 Holds Firm
Despite the recent volatility, Solana has managed to hold above a critical support level at $127. This price level has been tested several times throughout September, but SOL has yet to close below it. As long as the $127 support holds, the overall bullish momentum remains intact, giving traders confidence that Solana can continue its upward trajectory.
With favorable macroeconomic conditions, increasing trader interest, and a bullish technical setup, Solana is in a strong position to challenge the $140 resistance and potentially rally toward $160 in the near term. Keep an eye on the charts for further developments as Solana’s price continues to react to market conditions.
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