Solana flips Arbitrum and Ethereum in defi volumes as SOL price eyes $120 

Solana price moved above the $100 milestone on Jan. 30; rising defi volumes and positive sentiment surrounding the upcoming Jupiter airdrop could propel it further.

On Jan. 30, Solana’s price briefly broke the $100 barrier for the first time in 2024. However, barely 48 hours later, on Feb. 1, crypto prices dipped after Fed Chief Jerome Powell made a statement hinting at postponing rate cuts beyond March 2024 as widely predicted. 

Solana price fell 12.5% on Fed Chief Jerome Powell’s statements

In the aftermath of the Federal Open Market Committee (FOMC) meeting, Powell’s statement triggered a significant pullback across crypto markets. TradingView’s TOTAL3 chart represents the cumulative value of all listed crypto assets, excluding Bitcoin (BTC) and Ethereum (ETH).

The chart below shows that the altcoin markets shrunk by 5.3% between Jan. 30 and Feb. 1. Meanwhile, Solana (SOL) price dipped 12.5% from its Jan. 30 peak of $106 to a local low of $93.7 on Feb. 1. 

Altcoin Market vs. Solana (SOL) Price Trend Jan 30 – Feb 1 2024, Source| TradingView

This illustrates that bearish headwinds from Powell’s statement have impacted Solana’s price disproportionately, with its 12.5% dip exceeding the overall altcoin market average by more than 7%. 

Without a unique bearish catalyst, an asset’s price sinking faster than the sector average can be a key signal that it may be undervalued or oversold. This outsized volatility could set the stage for SOL price to enter a major rebound when the industry sentiment flips bullish.

Solana defi market share crossed 26% in January 

Solana defi trading volume trends for January 2024 signal that the 12.3% SOL price downtrend this week is likely not driven by a commensurate deterioration in its fundamental network utility. 

DefiLlama’s DEXs trading volume metric tracks and compares the nominal value of transactions involving crypto assets across various decentralized exchanges. This reflects the liquidity and investor activity within a decentralized financial ecosystem by blockchain. 

As seen in the chart below, Solana’s dominance within the defi sector increased from 16.5% to 26.9% between Dec. 31 to Jan. 31. 

Solana (SOL) Claims 1st place in DeFi Trading Volumes, Jan 24 - Feb 1 2024
Solana (SOL) Claims 1st place in DeFi Trading Volumes, Jan 24 – Feb 1, 2024 | Source: DeFiLama

A closer look at the chart reveals that Solana has witnessed a 15.2% increase in trading volumes in the past weekly timeframe; it leapfrogged Arbitrum (ARB) and ETH to claim first place. 

Increased trading volume on a blockchain network is a tell-tale sign that native tokens are in high demand. If this uptrend in Solana network participation and defi activity persists, it’s only time before SOL price enters a rebound phase. 

Positive speculations surrounding the Jupiter (JUP) token airdrop could further exacerbate the Solana defi activity in the days ahead, potentially adding another catalyst for a potential SOL price breakout toward $120. 

SOL price forecast: Bulls could target $120

From an on-chain perspective, SOL price appears to be oversold relative to the market average. The rising defi volumes and the upcoming Jupiter airdrop are key catalysts that could propel SOL’s price up the February chart. 

Given that Solana’s price recently broke above $105, the bulls could set their sights higher and attempt a retest of the $120 area during the next rally. 

The Bollinger band’s technical indicator also affirms this stance. When an asset’s price breaks above critical averages, it signals a growing bullish momentum. And with SOL currently trading at $96 at press time on Feb 1, it has moved above the 20-day simple moving average price of $93. 

This alignment suggests that Solana’s price is recovering, shaking off the bearish impacts of Powell’s rate cut postponement comments. 

Solana (SOL) Price Forecast February 2024
Solana (SOL) Price Forecast February 2024 | Source: TradingView

However, the upper Bollinger band shows that the bears could mount a significant resistance at the $103 area. A decisive breakout above that resistance sell-wall could open the doors to a potential $120 retest. 

On the flip side, the bears can force a reversal below $80, they could summarily invalidate this optimistic prediction. But as depicted above, the bulls will likely regroup at the lower Bollinger band to defend the $83 support.

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