Why Was Solana (SOL) the Number One Coin Last Week?

This week, Solana’s (SOL) value has surged by an impressive 40%, hitting a new high for 2023 at approximately $58. This marks Solana’s most substantial weekly performance since January 2023, buoyed by several factors including a broader uptick in the cryptocurrency market, largely driven by the excitement around Bitcoin ETFs and an overall increase in risk appetite.

A notable development alongside Solana’s price rise is the ongoing sale of SOL tokens by the FTX bankruptcy estate. Over the past two weeks, between 250,000 and 750,000 SOL tokens have been sold daily. Despite initial concerns, the Delaware Bankruptcy Court’s September 2023 approval for the sale of 55.75 million SOL tokens has had limited impact. This is due to a combination of some tokens being vested or locked and a weekly sales cap of $100 million, which has surprisingly spurred investor confidence.

For instance, Solana-centric investment funds, a key indicator of institutional interest, recorded inflows of $10.80 million in the week ending November 3, as reported by CoinShares.

Contributing to the broader cryptocurrency market rally is the enthusiasm surrounding potential Bitcoin ETF approvals, with Bitcoin itself approaching $38,000. Amongst this general upswing, Solana has outperformed other cryptocurrencies over the past 30 days.

On the futures market front, Solana’s open interest (OI) has reached about $772 million as of November 11, its highest since November 2021 when SOL hit a record peak of $260. High OI typically suggests increased market interest and potential liquidity.​ Moreover, the growing OI for Solana coincides with an uptick in funding rates for perpetual contracts, where a positive rate usually indicates a market dominated by long positions (buyers).

Earlier this week, SOL’s funding rate hit 0.035% every eight hours, translating to a 0.735% weekly cost for leveraged long positions, underlining a strong bullish sentiment.

The combination of rising OI and funding rates suggests that investors are increasingly leaning towards leveraged long positions, expecting the SOL price rally to persist.

From a technical analysis standpoint, Solana’s recent gains appear to be part of a bullish breakout. SOL’s price recently surpassed the horizontal trendline resistance of its ascending triangle channel. If this ascending triangle bottom reversal pattern holds true, SOL’s price could target around $90 by the year’s end, which would be a 50% increase from its current price levels.