The trading volume for Solana in January 2024 signals that the 12.3% SOL price downtrend this week is likely not caused by a network utility issue its fundamentals.
The trading volume metric on DeFillama’s DEXs tracks and compares the nominal value of the transactions involving crypto assets across multiple decentralized exchanges. This reflects the investor’s activity and liquidity within a decentralized financial ecosystem by blockchain. The chart below showcases the dominance of Solana within the DeFi sector, and highlights the increase from 16.5% to 26.9% between Dec 31 to Jan 31.
Solana DeFi Market Share Crossed 26% in January
Let’s deep dive into the chart, which reveals that Solana has witnessed 15.2% increase in trading volumes within the last weekly timeframe, it leapfrogged Arbitrum (ARB) and Ethereum (ETH) to claim 1st place.
A surge in trade volume within a blockchain network indicates a clear indication that there’s heightened interest in the native tokens. Should this upward trend in Solana network engagement and Defi operations persist, it’s merely a question of time before the SOL price embarks on a recovery journey. Optimistic conjectures revolving around the Jupiter (JUP) token airdrop might intensify Solana’s DeFi operations in the upcoming days, potentially introducing an additional trigger for a potential SOL price upswing towards $120.
SOL Price Forecast: The Bulls Could Target $120
From an on-chain perspective, SOL price seems to be overextended compared to the average. The increasing DeFi volumes and the imminent Jupiter (JUP) airdrop serve as pivotal drivers that could push SOL price higher on the chart in February.
After recently surpassing $105, should the bulls maintain momentum, they may aim for a retest of the $120 region in the upcoming rally. The Bollinger bands technical indicator corroborates this view. When an asset’s price exceeds crucial averages, it indicates a growing bullish momentum. With SOL trading at $100.65 at the time of writing on Feb 2, it has surpassed the 20-day simple moving average price of $93.
Solana (SOL) Recovery Phase
This alignment suggests that Solana’s price is entering a recovery phase, shedding the bearish impact of Powell’s comments about postponing a rate cut. Nevertheless, the upper Bollinger band signals potential resistance from bears around the $103 area. A decisive breakout beyond this resistance could pave the way for a possible retest of $120.On the other hand, if bears manage to reverse below $80, they could effectively nullify this optimistic forecast. However, as illustrated above, the bulls are likely to regroup at the lower Bollinger band to defend the $83 support.
