Solana Price Gears Up for Potential Rally as Smart Money Accumulates
Solana (SOL) has been exhibiting bullish signs, indicating a potential strong rally in the coming weeks. At the time of writing, SOL was trading at $212.39, up 10.6% from its September low and over 100% from its year-to-date low. This surge in price can be attributed to the token’s ability to convert a historical resistance level into support, coupled with renewed demand from institutional investors.
Key Resistance Level Turns into Support
In the weekly chart, Solana has successfully transformed the $204-$206 level into support, a level that has been a key resistance point several times in the past four years. This shift in market dynamics is a significant bullish indicator, as it suggests that buyers are gaining control over the market. The price action is further supported by data from blockchain analysis company Nansen, which shows that “smart money” investors, i.e., institutional traders with proven track records, are actively accumulating the token.
Solana Price has converted a multi-year key resistance level to support-1. October | Source: crypto.news
The involvement of smart money investors often leads to increased follow-up interest from retail traders, who tend to follow the footsteps of institutional investors when building their portfolios. Furthermore, derivation data tells a similar story of underlying strength, with the Solana Liquidity Heatmap from Coinglass showing a high density of short liquidations (yellow bands) around $213-$219, just above the current price level.
Potential Short Squeeze and ETF Introduction
The current market scenario suggests that buyers are putting sellers under pressure, which could lead to a potential short squeeze and accelerate profits if Solana presses higher into this zone. Additionally, investors are also speculating about the potential introduction of a Solana ETF in the United States, particularly after the SEC’s decision to rationalize the crypto spot ETF examination process. The introduction of a SOL ETF would likely increase significant demand from institutional investors, offering regulated exposure to Solana and expanding market liquidity.
Technical indicators also seem to support the bull case for SOL price. On the weekly chart, the 20-day moving average has observed a bullish crossover with the 50-day SMA, a sign of strengthening bullish dynamics and potential for continued pricing. Solana price is also on the verge of confirming a multi-year cup and handle pattern, which is marked by a U-shaped trough (the cup), followed by a smaller handle. In technical analysis, the price breaking out of a cup and handle pattern often follows with continued upward price action.
Solana Price has formed a multi-year cup and handle pattern in the weekly chart. October | Source: crypto.news
Short-Term Price Projections
At the time of writing, Solana was only trading under the target of $260, which would confirm the breakout. However, if Sol does not hold the support of $204, which is also closely in harmony with the 78.6% retracement level, the setup would become invalid. In the daily timeframe, the RSI is 50, indicating that there is still room for growth before it hits overbought levels. Meanwhile, the MACD line is slowly approaching a positive crossover, which traders can perceive as an early signal that the momentum in favor of the bulls is turning back.
Solana MacD and RSI chart – October 1st | Source: crypto.news
As such, Solana can potentially rise to $253 in the short term, marking the September high. For more information on Solana’s price action and market analysis, visit https://crypto.news/is-solana-price-gearing-up-for-a-rally-as-smart-money-accumulates/
Disclosure: This article does not contain investment advice. The content and materials presented on this page only serve for educational purposes.
