- Cryptocurrencies in correction mode.
- Solana tanks below $100.
- Solana was looming break-out catalysts.
Cryptocurrencies have been under pressure in recent days following a stalled breakout. The dollar strengthening across the board is one of the factors behind the recent deep pullback. Solana is one of the coins that have felt the full brunt of the US dollar strengthening to two-year highs.
SOLUSD technical analysis
While SOLUSD has pulled below the $100 level, it’s started showing signs of edging higher as a bounce-back play. A spike in risk-on mood in the capital market is one factor that could accelerate the bounce back. A bullish macro environment after months of sell-off is another factor that could help drive Solana’s price higher.
After the recent pullback, SOLUSD needs to bounce back and find support above the $100 psychological level to heighten the prospect of its rallying. It also needs to find support above the 65-exponential moving average, which has emerged as crucial support. Following the 30% correction from highs of $140, SOLUSD will have to power through the $113 handle to affirm the bullishness.
On the flip side, the coin failing to find support above the $100 barrier would only heighten the prospect of the coin edging lower in continuation of the long-term downtrend. A daily close below the $94 handle should pave the way for short sellers to steer drop to lows of $80, seen as a key support level.
Why Solana could rally
Improving risk-on mood
Solana has been under pressure on investors to shun riskier assets amid concerns about the global economy’s health. Runaway inflation and concerns about the central bank’s monetary policies have forced investors to scamper for safety in safe havens shunning riskier assets such as Solana. In addition, Solana has felt the full brunt of rising treasury yields. Investors have opted to invest their capital in treasury bonds in anticipation of the Federal Reserve hiking interest rates.
Better than expected quarterly results from key companies have provided a positive view of the health of the economy and its long-term outlook. The result has been an uptick in risk-on mood, with investors turning their attention to riskier assets battered in recent weeks.
Solana growing use cases
In addition to improving risk-on mood, Solana is increasingly becoming a force to reckon with in the broader cryptocurrency sector. The Phantom wallet, which is the most popular wallet for the coin, is experiencing strong uptake, as depicted by more than 2 million users over the past six months. The strong uptick affirms strong demand expected to support strong price movement.
In addition, Solana’s prospects around non-fungible tokens are growing by the day. Its Magic Eden marketplace handled over 4.6 million NFT transactions last month, affirming its growing popularity in the burgeoning space.
Hundreds of millions of dollars in investment are flocking the Solana blockchain investors, having taken note of the blockchains growing use case and long-term prospects. Its edge in hosting more projects stems from the fact that the blockchain can process more transactions per second. In addition, it comes with some of the lowest costs that continue to entice developers.
Final thoughts
The bullish case around Solana is affirmed by the growing number of developers and projects using its blockchain. The growing number of developers on the blockchain affirms its growing use case and relevance in the mainstream sector. While momentum is on the Solana blockchain, demand for the native token SOL should continue to increase, which should support an uptick in the price above the $100 barrier.
