Just like Bitcoin and other altcoins, Solana price has been facing high volatility and increased selling pressure this week. From a new 2024 high of $210, the value of the competing smart contract token has fallen 10% during Wednesday's U.S. trading session, hovering at $188.
An attempt to recover over the weekend took it above $200, but resistance at $205 overwhelmed the bulls, causing Solana to fall to $175, leading to more blood loss.
Solana price continued to rise by 4.5% in the past 24 hours, and trading volume increased by another 8% to $4.5 billion. SOL holds the fourth largest cryptocurrency with a market capitalization of $84 billion.
1. As DeFi TVL accelerates, Solana price is also rising
Since Solana began rebounding in the fourth quarter of last year, its decentralized finance (DeFi) ecosystem has grown exponentially, reaching a value of $4.78 billion in total value locked (TVL).
TVL will grow an astounding 70% from $1.42 billion in 2024 alone. TVL refers to the amount of value locked in smart contracts within the Solana ecosystem.
As Defi Llama shows using blockchain data, the continued growth of DeFi TVL reflects a significant reduction in circulating supply.
Investors who have been committed to the project for the long term tend to keep their tokens in smart contracts to grow their assets, rather than selling Solana in the first place to make a profit.
This approach also supports positive market sentiment, promoting and simplifying trend reversals, leading SOL advocates to predict that SOL will surge to new record highs above $260.
2. The Solana ecosystem continues to evolve
Solana’s rapid growth is attributed to its high transaction speeds, low fees, and scalable infrastructure, making it a strong competitor to Ethereum’s mature but crowded network.
Over the last year, the Solana network has become the protocol of choice for launching new projects, especially meme tokens like Dogwifhat (WIF) and BONK.
Solana has over 2.5 million followers on X, a vibrant community that supports other upcoming projects and initiatives and creates value.
According to CoinShares, the Solana investment product has attracted $1.5 billion in assets under management (AUM) to date, an increase of $8 million year-to-date, an increase of $24.9 million from last month, and an increase of $6.1 million in weekly inflows. .
Solana is the fourth most popular asset under management, behind Bitcoin, Ethereum, and Multi-Asset Class.
3. Solana Price Shows Bullish Pennant Pattern
The four-hour chart highlights a bullish pennant pattern that could result in a significant breakout of the previous high at $210 in the short term. This pattern allows for consolidation after a sharp rise in prices.
After taking profits, investors use this time to enter new positions ahead of another bigger breakout. Therefore, as long as SOL repeats the pattern's lower boundary, a breakout of the upper trendline is within reach.
Although currently still trading below the $190 resistance and gaining strength from the presence of the 20-day exponential moving average (EMA) and the 50-day EMA (blue and red lines on the chart), Solana appears ready to tip the scales towards Bullish side.
The Moving Average Convergence Divergence (MACD) indicator will soon support the uptrend, giving traders a signal to buy SOL. A daily close above $190 means a strong uptrend is brewing, with Solana likely to gain momentum above $210, pushing the $260 and $300 levels within reach.
