The Solana (SOL) price is attempting to continue its modest comeback on Christmas Day 2024. It was last seen probing for a pushback above the $200 level. It has seen an impressive 13% increase from the multi-week lows it recently hit in the $175 area. However, it still has a long way to go before it retests its recent highs in the $260s.
Downtrend Lingering
Despite the rebound, chart analysis indicates that the Solana price remains stuck in a downtrend. It remains significant in both its 21 and 50DMAs. A meaningful break above $220 would be needed to confirm an end to the bearish trend.
Factors Influencing Solana’s Price
Fed’s Policy Impact
The Fed’s recent hawkish policy shift, where it signaled only two rate cuts in 2025, knocked confidence in risk assets last week. But this might not keep Solana in a bearish trend for long.
US Economy’s Role
The US economy continues to perform very well. If this performance persists, it should underpin risk assets like US stocks, which in turn would be a tailwind for crypto, including Solana.
Incoming Pro-Crypto Administration
Much more crucial for crypto is the imminent arrival of the pro-crypto Trump administration and a new pro-crypto US Congress. The US crypto industry is on the verge of entering a new golden age. As adoption accelerates, this should be beneficial for all major crypto assets, and Solana is no exception.
On-Chain Fundamentals
The blockchain’s on-chain fundamentals for Solana are looking very healthy. Trading and transaction volumes as well as TVL (Total Value Locked) are in strong uptrends, according to DeFi Llama.
Solana’s Market Cap and Future Price Potential
Current Market Cap
Solana’s market cap was last around $94 billion, which is under 25% of Ethereum’s. It’s unlikely to overtake Ethereum this cycle, given that ETH will also likely see significant expansion.
Future Price Outlook
Nevertheless, it wouldn’t be unreasonable to expect the Solana price to increase 4-5 times from its current levels and match Ethereum’s current market cap. With the price still down 25% from its November peaks, Solana is a strong candidate for being a good crypto to buy now.
In conclusion, while Solana is currently in a downtrend, multiple factors suggest that it could experience a significant price explosion once it breaks above the key $220 level. The combination of a strong US economy, the incoming pro-crypto leadership in the US, and its healthy on-chain fundamentals all point towards a potentially bright future for Solana’s price in early 2025. Investors and enthusiasts in the crypto space will be closely watching to see if it can break through this crucial level and enter a new phase of growth.
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