Why is Solana (SOL) price up today?

Key Takeaways:

  • Solana token price spiked 32% since Sept. 27
  • Development activity on the blockchain has spiked, likely helping SOL price rally.
  • SOL price is moving inside a bullish technical pattern.
Why is Solana price up today?

NEW DELHI (CoinChapter.com) — Solana (SOL) price has spiked over 32% since Sept. 27 to reach a daily high near $24.8 on Oct. 2. The rally helped SOL price reach its highest level since Aug. 15.

It seems the investors believe that the impending sell-off from FTX might not result in a massive dumping of SOL tokens. SOL funding rates dropped after FTX gained the bankruptcy court’s approval to sell billions in crypto assets.

Development activity on Solana showed a recent spike.
Development activity on Solana showed a recent spike. Source: Santiment

However, increased developer activity on the Solana Network might have helped rally the token’s prices. The recently launchedSolana Hyperdrive Hackathon‘ could be a reason for the spike in developer activity. Increased development activity could translate into bullish cues for the SOL token.

Meanwhile, SOL’s Open Interest weighted funding rate turned negative on Oct. 2 after spiking 2,270% to 0.0166% from Oct1’s 0.0007%.

SOL funding rate spiked before turning negative on Oct. 2.
SOL funding rate spiked before turning negative on Oct. 2. Source: Coinglass

The plummet in the funding rate suggests traders speculate an end to SOL price rally soon. Traders have started booking profits off the recent SOL rally, which might lead to increased liquidations of SOL long positions.

Meanwhile, SOL price’s current rally has forced the liquidation of over $9.4 million in short positions since Sept. 27. In comparison, long positions saw about $4.1 million in liquidations in the same period. However, on Oct. 2, liquidations of long and short positions were nearly equal.

If SOL price continues its rally, short positions will get liquidated, forcing traders to buy SOL tokens to cover their margin calls, increasing the buying pressure for the Solana token.

SOL Price Moving Inside Bullish Pattern

The Solana token has formed a bullish technical pattern called the ‘Ascending Triangle.’

SOL price is moving inside a bullish pattern with a 200% price target.
SOL price is moving inside a bullish pattern with a 200% price target. Source: Tradingview.com

The technical pattern forms due to price moves that allow a horizontal trendline to connect the swing highs and a rising trendline to connect the swing lows. The price target for the pattern is equal to the triangltriangle’s at its widest part.

Thus, if the triangle pattern pans out, SOL price could rally 200% to reach the theoretical price target near $73.3.

Solana's TVL rose to its 2023 high.
Solana’s TVL rose to its 2023 high.

Furthermore, the Total Value Locked in Solana-based projects rose to its highest level of $339.37 million on Oct. 2. Interestingly, the spike comes when SOL price is down over 25% from its 2023 high of $32, suggesting increased investor trust in the Solana ecosystem.

Traders remained bullish on SOL price prospects, with an X-based trader by the username’ crypto bullet‘ pointing out that the Solana token was one of the first coins to flip its 50-week MA. In reply to another user, the crypto trader predicted a “conservative bull market” for SOL price to be $100.

Solana Price Rally Loses Steam

SOL price rally is losing steam, likely due to traders booking profits. The Solana token price spiked 5.1% on Oct. 2 before bears pared the gains. Moreover, the long upper wicks on recent daily price candles underscore the bearish pressure against the token.

However, the token’s bull run left SOL price’s 20-day EMA (red wave) poised to needle above its 50-day EMA (purple wave). Once shorter-term EMA crosses above the longer-term EMA, it would form a bullish pattern called the golden cross.

SOLUSD daily price chart with RSI.
SOLUSD daily price chart with RSI. Source: Tradingview.com

Traders often consider the pattern an indicator of positive market sentiment and a buy signal. Forming the pattern could help propel the SOL price to reach the resistance near $26.

Moreover, a rally could liquidate short positions and increase the buying pressure, helping the Solana token price target the resistance near $29 before correcting.

However, the RSI for SOL is overbought, with a score of 75.64 on the daily charts. Historically, overbought RSI levels have often preceded bearish reversals or consolidation periods for an asset. As a result, traders consider the occurrence a bearish signal.

Therefore, sellers could enter the market and push SOL prices to the 200-day EMA (green wave) support near $21.8. Additionally, breaching the immediate support level might force the Solana token price to test the support near $20

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