Solana price debuted above $170 a day after Bitcoin price ascended to a new all-time high, topping out at $73,737. The third-largest smart contracts token has since the beginning of Q4 last year rallied from $20, rewarding patient investors.
What’s Behind Solana Price Rally
SOL, the token powering the ecosystem, buoyed by enhanced sentiment in the market, battled the uncertainty in the crypto market in January falling to $80 from a December peak of $125.
On top of the generally bullish market bolstered by growing interest, Solana is a vibrant ecosystem, bringing together developers in the decentralized finance (DeFi) space, stakeholders in Web3, investors, and more.
Solana’s performance in the previous bull run, when it surged to a new all-time high of $260, is spreading FOMO (fear of missing out). As investors foresee the blastoff to new all-time highs, they are not afraid to bet on Solana even as the price hikes to higher levels.
Why Solana May Halt The Rally Briefly Before Resuming?
According to the Relative Strength Index (RSI), Solana is extremely overbought in both short and longer timeframes. The four-hour chart reveals the RSI neutral, and falling from highs around 80.
Short-term support at $170 has already given in and paving the way for an ongoing correction. SOL hovers at $167 and is expected to attempt a bounce back from the previous day’s open at $163.88.
Recommended: 4 Top Altcoins To Buy For 10X To 100X Returns As Bitcoin Halving Beckons
The sell-off from Solana’s recent high can be attributed to profit-taking, which is the second reason why the token might drop to $140 before blasting off again toward the psychological resistance at $200.
Based on the Money Flow Index (RSI), an indicator that transacts the flow of money in and out of Solana, sell-side pressure is intensifying. If the downward trend from the overbought region (70 – 100) persists SOL will have no choice but to seek support at $160. Slightly below this is the 20-day Exponential Moving Average (EMA) which in connection with the dotted ascending trendline may absorb the selling pressure to stop Solana from falling to $150 and $140.
Thirdly, although the crypto market is bullish at the moment, it is uncertain whether a major retracement may occur before the Bitcoin halving due in April.
A new norm has emerged where investors are buying during the hype for a major event only to cash out immediately after the actual development. This is referred to as a buy the rumor, sell-the-news narrative.
Bitcoin halving happens every four years to control inflation by reducing the supply of BTC in the market. This is achieved by slashing miner rewards by half.
As supply dwindles and demand increases, Bitcoin price tend to rally after halving. Sentiment across the market increases exponentially, triggering more rallies among altcoins.
However, this buy-the-rumor, sell-the-news narrative clouds the performance of major altcoins like Ethereum and Solana, which may plummet significantly if Bitcoin encounters extreme turbulence.
The post 3 Reasons Why Solana Price Could Tumble To $140 Before Blasting To $200 appeared first on CoinGape.
Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0
PRC Comment Policy
Your comments MUST BE constructive with vivid and clear suggestion relating to the post.
Your comments MUST NOT be less than 5 words.
Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.
Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.
Constructive REPLY to comments is allowed