Solana’s native cryptocurrency, SOL, is showing promising growth, driven partly by a resurgence of meme coin activity on its blockchain. This is not too far removed from last year’s frenzy, which pushed SOL‘s price to around $121.
With Solana’s price rising nearly 700% and coming to $123 on December 25 2023, it dipped below $90 recently. Was this a temporary correction or the start of a larger downward move?
Numerous positive fundamental factors have been behind this recent price growth. There has been a recent revival of interest in Solana-based meme coins and projects. Perhaps most notably, the Dogwifhat (WIF) token surged 50% to $0.48 in the 24 hours to afternoon on January 18, reaching a new all-time high.
Additionally, a significant boost to Solana’s prospects came from Franklin Templeton, a traditional finance firm. The company acknowledged the growth of Solana-based applications and the ecosystem’s potential in a series of tweets. This recognition from a major financial institution has bolstered confidence in Solana.
Further fueling excitement around Solana is the “Two” phone announcement by Solana Mobile, set to launch in 2025 at $450. Speculation abounds that owners of the “Two” phone might receive airdrops and applications from Solana-based projects, as was the case with the $650 airdrop for Saga phone owners last year.
Also, there has been a consistent increase in developer activity and value locked within Solana applications over the week to January 18, indicating renewed confidence and activity in the ecosystem after a slight decline at the start of 2024.
The daily chart of SOL shows that the upward trend, which peaked on Christmas Day, began on June 17 last year. This movement likely represents the third wave of a five-wave impulse pattern, concluding with the high on December 25.
Currently, the chart suggests we are in a wave four correction phase. This implies the recent downward trend is corrective. After this, we would typically expect a rise in wave five.
However, this rise might occur later. The formation of a descending channel could just be an initial lower-degree sub-wave of this correction.
This scenario indicates a potential short-term increase. This would, however, be a corrective rise leading to a further drop before the next significant upward movement. A crucial horizontal support level is around $80, aligning with the 0.382 Fibonacci retracement level, considered an optimal retracement point for wave four.
Previously, there was a breakout above this level, so a retracement that retests this as support before resuming a sustainable uptrend would make sense. If the price rose above $110, it could suggest the descending channel on the four-hour chart represented the complete wave four correction. In that case, an immediate continuation of the uptrend would be expected, although this outcome seems less probable.
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.