- Solana price has rallied by more than 900% in 2023.
- Companies will likely apply for a Solana ETF if Bitcoin approvals succeed.
- Solana also has numerous tailwinds in 2024, including rate cuts.
Solana (SOL) price had a difficult performance this week as investors took profits and as its ecosystem tokens like Bonk, Solend, and Marinade Finance retreated. SOL token retreated for three consecutive days and entered a bear market, which forms when an asset falls by over 20% from its highest level.
Why did SOL price retreat?
Solana has been one of the worst-performing big cryptocurrencies this week as it tumbled by more than 20% from its highest point this year. This retreat, in my view, was expected since the coin was up by more than 950% since January. In most cases, these moves tend to attract some profit-taking.
Solana also retreated as most of its tokens retreated. Bonk, the popular meme com, has already dropped by more than 56% from its highest point in 2023. Similarly, tokens like Solend, Raydium, and Marinade Finance have also collapsed hard this year.
Still, there are several reasons why Solana price could recover in 2024. First, it could rebound soon because of the so-called January Effect, which is a situation where many assets rally at the beginning of the year. We saw this January Effect in January 2023 as Bonk and SOL jumped sharply. This rally was notable because it happened at a time when the collapse of FTX was unfolding.
Second, from a macro level, there are chances that the Federal Reserve and other central banks will start cutting rates in 2024. Besides, the most recent data showed that inflation was slowly moving to its target of 2.0%. The six-month annualized PCE data has already moved to 1.9%.
Other central banks will likely embrace a dovish tone during the year since their economies are on the verge of a slowdown. In Europe, the ECB will likely cut rates since inflation has fallen to 2.4% while the bloc is in a recession. In the UK, the Bank of England is considering cutting rates now that inflation is nearing 2.0%.
The other catalyst is that Solana is giving Ethereum serious competition in areas like Decentralized Finance (DeFi) and Non-Fungible Tokens (NFT). Most developers see Solana’s technology as being superior than that of Ethereum.
Further, Solana price will likely do well if a spot Bitcoin ETF is approved. Such a move will open the possibility of companies filing for a Solana ETF in 2023.
Solana price forecast
The daily chart shows that the SOL price has been in a remarkable rally in the past few months. In this period, the token has remained comfortably above the 50-day and 100-day Exponential Moving Averages (EMA), which is a positive sign. The MACD remains above the neutral point while the Relative Strength Index (RSI) has pointed downwards.
I suspect that Solana can regain its bullish momentum again. If this happens, the next price to watch will be $150 in the coming months.
