Solana started holding value in the last week of November after about three weeks of rallying. SOL is down 15% from its all-time high of $264.39, but derivatives traders remain bullish. Solana’s trading volume has declined to average levels, but its price has stabilized above the $215 support. In order for SOL to replace XRP as the second largest altcoin, it would need to increase its market cap by $30 billion.
Solana (SOL) is currently consolidating after hitting an all-time high of $264.39 on November 22nd. While SOL is consolidating, trading volume has declined, but total open interest remains above average levels.
Funding ratios compiled by Santiment show that derivatives traders are bullish on SOL. The recent rally in Solana price has accelerated the narrative that SOL will reverse Ripple (XRP) market cap in the ongoing market cycle.
Solana price falls 15% from all-time high
Solana was trading at $225.54 early Monday morning. SOL is trading 15% below its all-time high from November 2024. The altcoin holds above the $215 support while SOL consolidates.
On-chain indicators point to a potential recovery for Solana in the coming weeks. As derivatives traders are bullish on SOL, the altcoin is likely to recover and end its consolidation phase. In this case, SOL could attempt to retest its all-time highs, and a break above $264.39 could force Solana into price discovery.
The $300 level is a psychologically important price level for SOL.
The SOL/USDT weekly price chart shows the potential for Solana to move higher. Altcoins may end their down phase and resume their uptrend. The momentum indicator Moving Average Convergence Divergence (MACD) flashes a green histogram bar above the neutral line, confirming the profit thesis on SOL.
Solana's weekly price trend has fundamentally positive momentum.
As seen in the chart below, SOL can find support in the zone between $215.27 and $229.60.
SOL/USDT weekly price chart
The daily chart shows that the consolidation may continue this week. For Solana to break out of the sideways trend, the daily candlestick closing price needs to exceed its November 25th peak of $256.
SOL is currently in the imbalance/support zone between $215.27 and $229.60. Once SOL completes its consolidation, the altcoin will be heading towards an all-time high and psychologically important level of $300 this cycle.
A daily candlestick close above $300 would confirm a continuation of the rally and potentially validate the $331.93 target. This coincides with the 161.8% Fibonacci retracement of the November 4th low of $155.11 to the all-time high of $264.39.
The Relative Strength Index (RSI) is 47, below the neutral level of 50, and the MACD indicates an underlying negative momentum in the SOL price trend on the daily time frame.
Traders should closely monitor technical indicators for signs of a reversal in the SOL price trend.
SOL/USDT daily chart
Solana on-chain metrics help improve SOL
Solana's funding rate across derivatives exchanges remained positive throughout December 2024, according to Santiment data. Derivatives traders are bullish on Solana.
Solana's total open interest reached a peak of $4.198 billion on November 7th. Since then, even though prices have strengthened, open interest remains above average levels.
Solana’s total open interest and funding rate | Source: Santiment
Solana's trade volume has decreased significantly. Although prices have recovered to their November 2024 highs, trading volumes across crypto exchanges have declined to average levels. This raises concerns about retail trader participation.
Quantity and Price (SOL) |Source: Santiment
Solana steals market share from Ethereum and competes with XRP
A market report published this week by 21Shares reveals that Solana has captured a significant portion of Ethereum (ETH) market share throughout 2024. Over $2 billion of crypto was transferred directly from Ether to Solana, and SOL recorded net inflows of $1.2 billion.
Analysts are quoted in the report.
Although we do not foresee a complete “flip”, Solana is poised to outperform Ethereum and capture more market share through UX and infrastructure improvements.
Solana may not outperform Ethereum in terms of market capitalization. This is because the latter holds a first-mover advantage in network effects and the total amount of cryptocurrencies locked in the chain. Still, SOL has $30 billion left to overturn XRP in market capitalization.
XRP is currently the second largest altcoin after Ethereum. If Solana overtakes XRP, it could usurp the altcoin spot and become number two behind Ethereum, laying the foundation for a “reversal” in subsequent market cycles.
