How Solana Price Was Rescued By Unlikely Meme Coin BONK - Where Next for SOL Price?
Solana's (SOL) recent recovery after its FTX-fueled downfall has been nothing short of impressive, with staggering gains of 76.21% in the past month. 56.31% of those were in the last 2 weeks, and 28.53% in just the past week.
Despite hitting a low of $8.14 on December 29, the token has seen a dramatic resurgence thanks in part to the introduction of BONK, the blockchain's first popular meme coin, on December 25, and is now trading around $21. But the burning question on the minds of many investors remains whether this upward trend is here to stay or simply a temporary BONK-backed rally?
Solana's Price Raises with BONK Meme Coin Rescue
The past year has been a challenging one for Solana, to put it mildly, with the cryptocurrency seeing a massive drop in value after the FTX scandal that saw its major backer go bankrupt. To add to the woes, in late December, the DeGods and y00ts projects, two of the most popular NFTs on the blockchain, announced they would be moving to Ethereum and Polygon in Q1 2023.
However, despite these setbacks, a glimmer of hope emerged in the form of the BONK token. A meme-inspired token similar to Shiba Inu or Dogecoin, BONK was launched on December 25, 2022, and immediately sent SOL's price soaring by 34% within 48 hours.
The price of BONK skyrocketed by over 3,000%, but crashed again a few days later and is now down over 73% from its all-time-high. Despite this, it still has a respectable market cap at $48,515,619, and has already brought attention back to Solana, which has risen to the be the 11th most popular cryptocurrency by market cap as of writing.
Solana-powered platforms like Magic Eden have shown interest in integrating BONK as a accepted currency on their platforms, and NFT projects like Jungle Cats have promised holders the opportunity to earn BONK upon staking their NFTs.
However, it remains to be seen whether the hype around BONK will be sustainable in the long term. Only time will tell how this new token will impact the future of Solana, but for now, it's certainly giving the community something to be excited about.
Solana (SOL) Price Prediction and Technical Analysis
SOL has been consolidating around the $20 level and has been trading above its 20-day, 50-day, and 100-day EMA, which suggests the short to long-term bias for this cryptocurrency is still bullish. The next EMA-related target of SOL is the 200-day moving average, currently at $30.44.
The volume is currently at 2.511 million, which is lower than the average volume of 9.148 million. Solana's price is $21.13 as of writing, a 3.58% decrease for the day. It's currently forming a bearish inverted hammer after closing the previous two days with losses, suggesting that there may still be a continuation to the downside.
Taking the volume and price action into consideration, this suggests that trading activity for the cryptocurrency is relatively low, that the breakdown doesn't have support, and that it may be retracing after a run-up of more than two weeks.
In addition to this, the RSI is at 65.93 after posting a high of 87.84 on January 14. Since then, the price has been moving downwards overall, along with the RSI, with a couple of failed attempts at breaking $24.40. Potential support where the RSI could bounce is the significant area of RSI 60.
The MACD indicator is currently at 2.55, with a signal line at 1.93 and a histogram of 0.63. This suggests that the Solana is trending upwards over the longer term, but the gap between the MACD and the signal line has been decreasing lately, indicating bullish momentum may be weakening.
Plotting a Fibonacci retracement level from its recent run-up reveals the levels with a high probability of acting as potential support. After seemingly getting rejected from the FIB 0.236 level of $21.06 in today's trading activity, the next potential support is at $18.58 of FIB 0.382 which coincides with the previous resistance now turned support area of $17.64 to $18.86.
If the support successfully holds, the next potential target for the cryptocurrency is the area between $26.89 to the psychological resistance of $28.
The technical indicators provided show that Solana's price is in a retracing phase, but with a strong long-term trend. Traders and investors should be cautious about placing positions with this current price action, as SOL prices may be heading lower in the next couple of days. This is particularly true if the crypto market as a whole continues to stall.