Solana (SOL) appears to be on the verge of a bull run in the current cryptocurrency market surge led by Bitcoin (BTC), according to independent market analyst Hansolar. Hansolar argues that SOL has the potential to replicate the price trends of Ether (ETH) during previous bull markets in the crypto market. For example, during the 2020-2021 cycle, ETH’s price surged from around $85 to as high as $4,935, following Bitcoin’s upward trend.
Interestingly, ETH’s uptrend increased by about 1,400% after Bitcoin reached a new record high above $20,000, as shown in the three-day price performance chart. This pattern could repeat in 2024 if Bitcoin continues its extended bull run above its November 2021 record high of $69,000. Hansolar suggests that this time, Solana could benefit equally when Bitcoin reaches new all-time highs.
Hansolar states, “Previously, ETH took off when BTC actually broke out into ATHs. It’s then when retail buys into SOL as the high beta catch up play.” This suggests that if Bitcoin reaches $150,000, as predicted by Fundstrat’s Head of Research Tom Lee on the prospects of ETF approval, Solana could have a long-term upside target of $600. This would be nearly 450% higher than the current price of SOL.
Fundamentally, Solana has seen significant network adoption recently, with the total value locked (TVL) across its ecosystem reaching 20.51 million SOL, the highest level since January 2023. As more assets are locked into DeFi platforms, the circulating supply of these tokens may decrease, resulting in increased demand relative to supply. This scarcity effect can contribute to price appreciation of the locked tokens.
Solana’s rising TVL aligns with its sustained quarter-over-quarter growth tracked by Messari. In Q4/2023, the network saw a 103% surge in average daily fee payers and a 961% increase in average daily DEX volume, along with a 359% increase in average daily NFT volume. In Q1/2024, the airdrop of Jupiter DEX’s native token, JUP, further boosted on-chain activity on the Solana blockchain, with NFT volumes peaking near $5 billion, highlighting strong underlying demand for SOL tokens.
In terms of technical analysis, Solana is currently targeting $200 as its primary upside target due to the formation of a bullish continuation pattern on its daily chart known as a bull pennant. This pattern occurs when the price consolidates within a symmetrical triangle structure following a strong upward move. The pattern resolves when the price breaks above the upper trendline and rises by the height of the previous uptrend. As of February 28, SOL’s price was testing the pennant’s upper trendline for a potential breakout, which could push the price towards $200 in March, representing a 75% increase from current levels.
On the other hand, if the price breaks below the pennant’s lower trendline, it could invalidate the bullish setup. In this scenario, SOL’s price could drop by the same magnitude as the previous upside move, towards $60.75, a decrease of approximately 45% from current levels.