- Indicators suggested that SOL looks almost certain to hit $334 for a start.
- The token’s correlation with ETH was negative, but with BTC, it was strong.
For the last seven days, Solana’s [SOL] price struggled to produce an impressive run. According to data from CoinMarketCap, the price of SOL was $167.12 at press time.
This was around the same value it was on the 25th of May. On a Year-To-Date (YTD) basis, SOL has increased by 52.63%. But it was nothing compared to the performance of the token in 2023.
However, the recent underwhelming price action has not stopped Solana bulls from betting on an incredible rally. For most SOL holders, the price of the cryptocurrency would hit nothing less than $500 before the end of this cycle.
SOL needs Bitcoin, not ETH
But this same set also predicted that Solana would surpass its all-time high of $260 before the end of 2024’s first quarter. However, that did not happen as the closest SOL got to this target was $210 in March.
AMBCrypto analyzed Solana’s price prediction from an on-chain perspective. First off, we looked at the correlation with Bitcoin [BTC], and with Ethereum [ETH].
According to data from Dune Analytics, SOL’s correlation with BTC was 0.83, indicating that the prices move in the same direction most times.
Source: Dune Analytics
For ETH, the reading was 0.10, suggesting a divergence between both cryptocurrencies. As such, if SOL were to hit $500 in the near time, BTC would have to increase past its all-time high.
Another metric AMBCrypto looked at was social dominance. Social dominance shows the rate of discussion about a token when compared with other cryptocurrencies in the top 100.
Has a good entry surfaced?
According to data from Santiment, Solana’s social dominance was 4.938%. When compared to the highs in March, this reading was low.
However, history showed that low social dominance could be a good buying opportunity. This is because a decrease in conversations about the token means it has not hit a high level of demand.
As such buying SOL around $161 to $168 could be a good entry point before another rally begins. To further buttress this point was the Open Interest (OI).
OI decreases or increases based on net positioning. If the indicator increases, it means that money is flowing into contracts related to the token.
On the other hand, a decrease implies that liquidity is exiting the market. At press time, SOL’s Open Interest was down to $807.25 million.
Source: Santiment
Concerning the price, this plunge indicated that Solana could dump into the underlying support which was at $161. However, this does not suggest that an increase in open contracts would not occur again.
In the case when SOL’s OI rises past $2 billion like it did some months back, the price could make a 100% increase. From the press time price, this means that the token’s target could be around $334 in a few months.
Data says “enough buying power”
In addition to the metrics above, AMBCrypto also looked at Solana’s Total Value Locked (TVL). TVL tracks if market participants are locking or staking assets in a protocol and removing their capital.
When the metric increases, it means that the network is healthy and participants trust the project to produce a good yield. On the other hand, a decrease implies an increase in the number of assets withdrawn.
Based on DeFiLlama’s data, Solana’s TVL was $4.80 billion. This was a 20.27% increase in the last 30 days. But the last seven days have not been rosy for the token as it seemed some staked SOL were withdrawn.
Source: DeFiLlama
Regardless of the recent drawdown, the TVL of the chain could hit $8 billion especially as activity on the network was much more than other projects.
If (when) this happens, demand for SOL could be incredible, possibly leading the price to hit or surpass the $500 mark. Beyond this, Dune data showed that the circulating supply of stablecoin on Solana has been increasing.
Realistic or not, here’s SOL’s market cap in ETH terms
Stablecoins like USDT, USDC, and the recently added PYUSD have been contributing to this hike.
The increase here, suggests that addresses on the chain were armed with enough buying power to send the value of SOL higher.