Solana's price is up 40% this week on easing concerns over the FTX dump and growing hype around a Bitcoin ETF, while SOL/USD technical data hints at more upside potential.
This is Solana (SOL)'s best weekly performance since January 2023. Many factors have contributed to this rise, including the general uptrend of the cryptocurrency market driven by the euphoria of the Bitcoin ETF and a growing appetite for risk in general.
Acryptoinvest.news: Solana (SOL) weekly price chart. Source: TradingView
FTX dump concerns fail to sway Solana bulls
Solana's growth coincides with the FTX bankruptcy estate selling 250,000–750,000 SOL tokens daily over the past two weeks.
Delaware Bankruptcy Court Approves Sale of 55.75 Million SOL Tokens in September 2023. The limited impact of these sales due to some tokens being either repossessed or locked up, as well as the weekly sales limit of US$100 million, turned initial concerns into investor enthusiasm.
For example, funds targeting Solana, one of the barometers for measuring institutional flows into the SOL market, saw $10.80 million in inflows in the week ending November 3, according to CoinShares.
Acryptoinvest.news: Institutional net flows pass through crypto funds. Source: CoinShares
The Bitcoin ETF euphoria is one of the main reasons for the overall rise in cryptocurrency prices, driven by Bitcoin's rise to $38,000. Solana, however, showed the best result in the last 30 days.
Acryptoinvest.news: Best cryptocurrency performance for 7 and 30 days. Source: Messari
Solana open interest grows along with the funding rate
On November 11, open interest in Solana futures reached a significant level of approximately $772 million, the highest level since November 2021, when the SOL price set an all-time high of $260. High levels of open interest indicate greater interest and potentially greater liquidity in the market.
Acryptoinvest.news: Solana futures with open interest. Source: Coinglass
Meanwhile, Solana's OI growth coincides with an increase in funding rates – the commission paid by one party to perpetual contracts to the other every 8 hours. A positive funding rate usually means that the market is dominated by long positions (buyers), i.e.. they pay the shorts (sellers).
Earlier this week, the SOL funding rate rose to 0.035% in eight hours. This funding rate represents a weekly cost of 0.735% for long leveraged positions, indicating strong bullish sentiment in the market.
Acryptoinvest.news: Solana-weighted funding rate, OI. Source: Coinglass
Rising OI and funding rates together hint at greater investor appetite for long leveraged positions.
Simply put, most derivatives traders expect SOL prices to continue to rise.
Technical breakthrough of SOL price
Solana's gains this week appear to be part of a bullish breakout. It is noteworthy that two weeks ago the SOL price broke through the resistance of the horizontal trend line of the ascending triangular channel.
Acryptoinvest.news: Weekly price chart SOL/USD. Source: TradingView
If the ascending triangle base reversal works, the SOL price target for the rest of the year will be around $90, which is 50% higher than the current price level.
However, bears are pinning their hopes on the weekly relative strength indicator (RSI), which is now at its most overbought level since September 2021.
Thus, the risk of correction is high: a correction to the upper trend line of the triangle around $30.