Solana hits record high with SOL price up over 218% in six weeks — What's behind the rally?

Solana hits record high with SOL price up over 218% in six weeks — What's behind the rally?

Solana (SOL) prices printed another milestone of nearly $85 high on Aug. 27 as traders assessed a flurry of optimistic fundamentals, including Solana's potential foray into Wall Street.

On Aug. 24, digital asset management firm Osprey Funds registered a first-of-its-kind Solana fund with the U.S. Securities and Exchange Commission (SEC). In doing so, the New York firm hinted at giving institutional exposure to SOL markets as the token's value surged by more than 4,300% in 2021.

A day later, real-time data feeder Pyth Network announced that it is going live on Solana's proof-of-stake blockchain. The firm provides "high-fidelity streaming data" from trading firms and exchanges, which allows it to cover global market activity without depending on any single data source.

Pyth will use Solana's cross-chain communication protocol "Wormhole" to broadcast market data with decentralized applications functioning atop Ethereum, Binance Smart Chain, and Terra blockchains.

The uplifting events assisted the SOL/USD exchange rate rise to a record high of $84.96 on Friday, up more than 218% in six weeks of trading.

SOL bulls see higher demand prospects

Traders apparently raised their bids on the pair, anticipating that its foray into Wall Street, coupled with adoption in the decentralized finance (DeFi) sector, would boost the demand for SOL tokens in the future.

That is primarily because SOL serves two primary cases in the Solana network. First, users can stake their SOL holdings directly on the network or by delegating them to an active validator to secure the blockchain. In return, stakeholders receive inflation rewards proportional to their staking balance.

Second, users can use SOL as fees for conducting transactions or running smart contracts. Therefore, the more the projects get deployed into the Solana ecosystem, the higher the promise to boost the demand for SOL tokens.

The previous weeks attested to ongoing growth in the Solana ecosystem. For instance, Solana forayed successfully in the non-fungible token (NFT) sector mid-Aug with the launch of Degenerate Apes. The project saw a collection of the 10,000 pictures of comic apes selling out in just eight minutes.

As it happened, the overall trading volume reached almost 96,000 SOL (over $5.9 million at that time).

Significant move on #Solana against the market. That for me (a guess) suggests cash rotating in for the NFT market that's just beginning to warm up.— Tyler (@TylerDurden) August 26, 2021

SOL/USD technical setup

Solana's latest upside move has prompted it to test an upward sloping trendline as resistance, which constitutes an Ascending Channel, as shown in the chart below.

The SOL/USD price rally has slowed down near the Channel's upper trendline, awaiting either a bullish breakout or a pullback towards the Channel's lower trendline, with the 50-4H exponential moving average (the velvet wave) near $72.14 as interim support target.

Meanwhile, the daily SOL/USD chart also alerts potential downside risks due to overbought relative strength readings (RSI above 70). Nonetheless, strong fundamentals could keep providing bullish backstops even in the face of interim price corrections.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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