SOL continues vertical rally with 21% gains on Solana’s NFT buzz; crash ahead?

Solana SOL Wormhole Mango Markets
Solana SOL Wormhole Mango Markets
  • SOL/USD pair rallied north of $100 to tap $120
  • NFT buzz around the Solana ecosystem fuelling the rally
  • The price chart reveals a heavily overbought scenario for SOL

JAIPUR (Coinchapter.com) – Solana’s SOL resumed its parabolic uptrend on Tuesday, with the SOL/USD pair adding 21% gains in the last 24 hours.

Prices took off from lows at $95.3 on the back of strong buying pressure on Monday. But bulls showed no signs of exhaustion post clearing the previous high at $103. And pushed the pair upwards towards $120.

Related: Solana hits new record high at $103

SOL’s recent exponential rally (since Thursday) came on the heels of rumors surrounding the launch of a supposed token-burning event. The Solana team put out a teaser showcasing a purple-flamed lighter which fuelled the speculation. The move seemed like a deliberate attempt to spark token-burning talks.

Solana’s NFT Buzz

However, the actual driver of the price spike may have to do something with the NFT hype that has gripped the Solana community recently. Blockchain market insights provider Santiment described the ongoing sentiment around the project as historic.

“#Solana’s run-up just keeps getting more historic. #Crypto traders are discussing the #NFT darling at rates most #altcoins can only dream of. Weighted sentiment has surpassed 4 deviations above mean, sending crowd positivity & volume to historic levels.”

noted Santiment

Related: Solana (SOL) scores another record high on institutional adoption FOMO

Resident Solana developer Jordan unveiled Metaplex on Monday. The permissionless protocol is designed for artists and creators to leverage the Proof-of-History public blockchain for their NFT needs.

Jordan said, “Just wait till Wednesday; all will be revealed when asked about the details.” NFT users purportedly flocked to Solana distressed with gas fees hike on Ethereum, where the NFT space originally spawned. 

“Solana NFTs are clearly gaining momentum because people are getting sick of gas fees.”

observed NFT commentator Giancarlo Chaux

Some Solana-based NFTs like Degen Ape Academy saw surging popularity within a few days of launch.

But the NFT-led hype has pushed the SOL/USD pair well into the overbought territory.

SOL/USD Technical Setup

Relative strength index (RSI) numbers read 87.46 as the SOL/USD pair zoomed to $120. The figure, way beyond the usual 30-70 range, raised overvalued concerns amongst SOL holders. RSI figures below 50 favor bulls, and those above 50 support bears.

In the previous stratospheric RSI reading scenario, the figure declined to 37.97 after topping at 91.29 on August 16, pushing the token’s market into a sideways limbo.

Solana's SOL risks significant correction
Solana’s SOL risks significant correction. Source: SOLUSD on TradingView.com

A similar setup looks to take shape with sellers showing up to book profits after a blazing rally.

As a result, RSI ticked down, with bears taking SOL prices from $120 to $117. In a serious selloff, the SOL/USD pair risks dropping near $83 (which coincides with the 50-day moving average). On the RSI front, a correction to 50 is what traders who anticipate placing buy bets should look out for.

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