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Solana (SOL) continues its impressive rally, reaching a new peak of over $220 in over 3 years and pushing its market cap to over $103B. This recent surge solidifies the growing influence of Solana in the crypto market, accompanied by heightened activity in Solana-based meme coins. With this price and market cap surge, accompanied by investors' interest and growing confidence in the Solana blockchain, Solana's next step would be to take over Tether USDt (USDT) by market cap to become the 3rd largest cryptocurrency. Will it happen before the end of 2024?
Solana Price Hits 3 Years High of $221
Solana price's breakout past the critical $201 resistance level and a reach of highs of $221 is highly positive as it's been its highest ever in 3 years. Known for its fast, scalable blockchain technology, Solana has earned the title of “Ethereum killer.” Currently the fourth-largest cryptocurrency, Solana’s market cap has risen impressively over $103B, reflecting strong investor confidence.
Despite this impressive rally, caution is advised. Active addresses on Solana’s network have declined, leading to a Price DAA (Daily Active Addresses) Divergence, which often suggests potential selling pressure. When price rises as active addresses decline, it can indicate waning investor engagement, possibly reducing upward momentum. If this trend persists, Solana’s recent gains may face a reversal as investors secure profits, impacting SOL’s price stability.
Overbought RSI Raises Caution for Solana Investors
The Relative Strength Index (RSI) shows Solana in an overbought zone, historically associated with price corrections. An elevated RSI suggests SOL might be overvalued, leading to short-term downward pressure. Investors are advised to monitor the RSI closely, as further gains could hinge on it moving out of the overbought territory to mitigate the risk of a potential reversal.
Solana-Based Memecoins Surge: “Act I: The AI Prophecy” Takes the Lead
Solana’s rise extends beyond SOL itself to its ecosystem, notably the meme coin market. A Solana-based meme coin, "Act I: The AI Prophecy" (ACT), saw a remarkable 1,720% surge following listings on Binance and Crypto.com. Originally issued in October with a modest $20 million market cap, ACT’s valuation jumped to $422 million, with trading volumes reaching $293 million on Raydium and $60 million on Binance. This exponential growth highlights memecoins’ volatile nature, as liquidity variations can drive drastic price fluctuations.
ACT is part of a community-driven project on Discord featuring AI chatbots capable of discussing various topics. Although ACT has surged in value, one of the project’s founders distanced themselves from the token, selling their holdings, and showcasing the speculative nature of memecoins.
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Other Solana Memecoins Make Waves Amid a Heated Altcoin Market
Beyond ACT, another Solana-based meme coin, "Peanut the Squirrel" (PNUT), saw a 344% increase, reaching a $450 million market cap after its Binance listing. With limited liquidity, meme coins like ACT and PNUT experience sharp price swings, influenced by market depth. For instance, on Binance, a $100,000 sell order could lower ACT’s price by over 2%, underscoring the volatility of the memecoin market.
SOL Price Prediction: Key Support and Resistance Levels
With SOL now trading around $220, the $201 level remains a crucial support point. Holding above this level could sustain the current bullish momentum, while a slip below $201 may see SOL fall to the $186 support floor. This level is essential for maintaining Solana’s uptrend. Conversely, if Solana keeps its momentum, it may challenge the next resistance at $219, and a successful push beyond $221 could lift Solana’s market cap further, strengthening bullish sentiment and countering current bearish signals, pushing it closer to the 3rd rank making it the second best altcoin. And if it manages to break past its old ATH of $260, only 15% away now, new opportunities and more confidence could be ahead for SOL price.
Conclusion: Gains vs Risks
Solana's new high past $220 and the explosive growth of Solana-based meme coins like ACT and PNUT highlight the dynamic nature of the crypto market. Yet, signals of caution, such as declining active addresses and an overbought RSI, suggest that a correction may be on the horizon. Investors should watch key support levels closely and remain aware of the inherent risks in the memecoin market to make informed decisions.
