Solana’s (SOL) looks ready to undergo a massive upside move by March, based on a mix of technical and fundamental indicators.
SOL price “bull flag” breakout possible
As of Jan. 18, SOL’s price was testing the upper trendline of what appears like a bull flag pattern.
Bull flags are bullish continuation patterns characterized by the price moving inside a downward-sloping channel (flag) after a strong upside move (flagpole). They typically resolve after the price breaks above the channel’s upper trendline and rise by as much as the flagpole’s height.
Thus, Solana eyes a breakout above its flag’s upper trendline toward $194 — up around 80% from current price levels — by March.
Conversely, a pullback from the upper trendline could send SOL’s price down toward its lower trendline near $80.
Nonetheless, the cryptocurrency may witness some accumulation and sideways price action at its 50-day exponential moving average (50-day EMA; the red wave) near $87, which has served as a long-term support zone. Staying inside the flag range would keep the breakout possibility intact.
Solana ETF buzz
The approval of spot Bitcoin ETFs on Jan. 11 has raised industry hopes that other cryptocurrencies, including Solana, could also get a spot ETF in the future.
Franklin Templeton, a trillion-dollar asset management firm, fueled the Solana ETF buzz further after praising the blockchain for its advancements in decentralized finance, infrastructure, nonfungible token innovation and memecoins. The company already offers a namesake spot Bitcoin ETF product under the ticker (EZBC).
Franklin Templeton has been leading the charge for integrating digital assets into the traditional financial space for years, and they're setting their eyes on Solana
— Austin Federa | (@Austin_Federa) January 18, 2024
Can't wait to see what the future holds https://t.co/Pk1ZIsrhmn
Anticipation of a spot Solana ETF could catalyze a surge in SOL price, similar to the rally Bitcoin experienced before its ETF approval.
Fed rate cut expectations
Expectations of a dovish Federal Reserve can further boost Solana prices higher in the coming months.
The CME’s Fed futures fund rate projections see a 59.5% probability of a 25 basis point interest rate cut in the United States by March 2024.
Lower interest rates can lead to a weaker U.S. dollar as yields on dollar-denominated assets fall. Cryptocurrencies like Solana, which are often priced against the dollar, can increase in value as the dollar weakens.
Related: Fed rate cuts could be a boon for DeFi and stablecoins — Fidelity
The U.S. Dollar Index’s (DXY) technical setup indicates a sell-off period in the coming days. Notably, it has been forming a rising wedge pattern since December 2023, with its downside target between 101.50 and 102.25, depending on the breakdown point, as shown below.
Therefore, Solana’s persistent inverse correlation with the U.S. dollar should also boost SOL’s likelihood of undergoing a major rally by March.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
