The price of Solana (SOL) has soared 40% this week to establish a new 2023 high at around $58.
That is Solana’s best weekly performance since January 2023. Many factors have contributed to the gains, including a general cryptocurrency market uptrend led by Bitcoin ETF euphoria and growing appetite for risk overall.
Solana (SOL) weekly price chart. Source: TradingView
FTX-dump fears fails to shake Solana bulls
Solana‘s rise coincides with the daily selling of 250,000-750,000 SOL tokens by FTX bankruptcy estate in the last two weeks.
FTX has been selling between 250k-700k $SOL every day for the last 2 weeks while price has either been going up or sideways.
so far its been getting absorbed like a champ and at current rate their unlocked tokens should be depleted within a week.
once this seller is gone i can… pic.twitter.com/AtnTqz3uxG
— Bluntz (@Bluntz_Capital) November 9, 2023
The Delaware Bankruptcy Court approved the sale of 55.75 million SOL tokens in September 2023. The limited impact of these sales, due to some tokens being either vested or locked, and a weekly sale limit of $100 million, has transformed initial fears into investor enthusiasm.
For instance, Solana-focused funds, one of the barometers to gauge institutional flows in the SOL market, witnessed inflows worth $10.80 million in the week ending Nov. 3, according to CoinShares.
Institution net flows across crypto funds. Source: CoinShares
Bitcoin ETF euphoria is one of the primary reasons for the overall uptrend in cryptocurrency prices, led by Bitcoin’s rise toward $38,000. Solana, however, has been the best-performer in the past 30 days.
Top cryptos 7-day and 30-day performances. Source: Messari
Solana open interest pops alongside funding rate
Solana’s futures open interest reached a significant level of around $772 million on Nov. 11, the highest since November 2021, when SOL’s price had established its record high of $260. High open interest levels indicate greater interest and potentially greater liquidity in the market.
Solana futures Open Interest. Source: Coinglass
Meanwhile, Solana’s rising OI coincides with increasing funding rates, a fee paid by one side of the perpetual contracts to the other every 8 hours. A positive funding rate typically means that longs (buyers) are dominant in the market, i.e., they’re paying shorts (sellers).
Earlier this week, SOL’s funding rate increased to 0.035% per eight hours. This funding rate represents a 0.735% weekly cost for leverage longs, suggesting strong bullish sentiment in the market.
Solana OI-weighted funding rate rate. Source: Coinglass
A rising OI and funding rate together hints at a higher appetite for leveraged longs among investors.
Simply put, most derivatives traders anticipate the SOL price rally to continue further.
SOL price technical breakout
Solana’s gains this week appears as part of a bullish breakout move. Notably, SOL’s price broke above the horizontal trendline resistance of its ascending triangle channel two weeks ago.
SOL/USD weekly price chart. Source: TradingView
If the ascending triangle bottom reversal plays out, the upside target for SOL price before the end of the year is at around $90, up 50% from current price levels.
Related: Is it altseason? Altcoin 30-day performance and total market cap flash bullish
The bears, however, will pin their hopes on the weekly relative strength indicator (RSI), which is now at its most overbought level since September 2021.
SOL/USD weekly price chart. Source: TradingView
Therefore, the risk of a correction are high, with a correction toward the triangle’s upper trendline near $30 on the table.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Source: https://cointelegraph.com/news/why-is-solana-price-up-this-week
