Why is Solana Pumping? Everything You Need to Know

The recent surge in Ethereum gas fees and Solana’s airdrops, like Bonk, seem to be the main factors driving the recovery in SOL price.

 

For the first time in eighteen months, the price of Solana soared by over 60% in the week ending December 24, reaching $118.

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Why is Solana Pumping

 

This week’s price spike for Solana occurs at the same time that Ethereum, a layer-one blockchain competitor, raises its gas tax in its ecosystem.

 

Some users even reported being requested $150 to complete a $50 transaction, and the cost of carrying out a transaction on the Ethereum blockchain momentarily surpassed $10 earlier this week.

 

 

 

 

Since the beginning of the week, the price of Ethereum gas has dropped by over 50%. Despite this, customers are looking for other blockchain platforms that provide reduced transaction costs after its brief spike. The price of Solana has probably gone risen in the last few months due to this increase in user activity.

 

For example, Messari reports that active addresses on Solana have surged by about 400% over the past three months, whereas Ethereum has seen a gain of only 3%.

 

 

 

 

 

 

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Solana Airdrops Promote User Activity

 

 

Recent airdrops on the Solana blockchain, particularly the Bonk memecoin’s, have undoubtedly contributed significantly to the blockchain’s increased daily active addresses and price. Moreover, the volume of Solana’s decentralized exchange has reached an all-time high this week.

 

 

 

 

The reduced transaction costs of Solana make it easier to generate new addresses, which is especially advantageous for individuals seeking airdrops. According to CoinCodex, Solana’s fees have consistently remained below $0.01. Conversely, certain detractors on social media argue that the reduced fees do entail certain drawbacks.

 

 

 

 

 

 

 

 

Solana Draws in Institutional Funding

 

After a successful week of capital inflows, Solana is on the rise again this week.

 

Significantly, investment funds located in Solana received $10.6 million in the week ending December 16, surpassing the inflows of top competitors like as Ethereum and Bitcoin BTC. Among cryptocurrency funds, Solana’s December inflow of $14.1 million was the most.

 

 

 

 

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Solana Market Analysis

 

Yet, technical signs imply that the recent price increase of Solana may be losing momentum.

 

For example, the relative strength indicator (RSI) and volumes for SOL have reached lower highs on the three-day chart, but the price has achieved higher highs. From a technical perspective, this divergence suggests a negative trend that could lead to a price drop in the near future.

 

 

By the end of the year, if bears win out, SOL’s price might fall to around $100, where it has a 0.382 Fibonacci level. The price might move toward the 0.236 Fibonacci line, which is near $66 if the price closes decisively below $100.

 

In contrast, the price might surge into the 0.618 Fib line close to $157.50 if it closes above the 0.5 Fib line at about $130.

 

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