As the Solana network approaches a major milestone, its market capitalization is approaching an all-time high ($80 billion). However, this success can be overshadowed by a serious concern that is not often talked about. The SOL token supply has increased from approximately 300 million to 443 million since the last bull market. This increase in supply can significantly impact the token value and investor sentiment. Here are the details…
Annoying development for Solana: Supply problem
While the supply of the cryptocurrency increases significantly, if it is not accompanied by an increase in demand, it could lead to dilution of the token value. For long-term SOL investors, this increase in circulating supply means their share of the market value of the network is decreasing. This can be likened to a company issuing more shares; If the market value of the company does not increase proportionately, the value of existing shares tends to decrease.
When we look at the SOL/USDT chart on TradingView, we see a strong uptrend. SOL price is rising steadily and finds continued support in upward-sloping and well-aligned moving averages. This is an indicator that points to an upward trend. In particular, the 50-day moving average acted as support for the price, aiding its upward movement.
What is the latest situation in SOL price?
The latest price candles show that the increase in the value of SOL is accelerating, indicating a bullish market trend. However, charts of increased volume accompanying a price increase can have a two-fold effect: while they indicate strong buying interest, they can also raise concerns about overbought conditions. In particular, the RSI (Relative Strength Index) is moving towards the overbought zone.
According to the last candle on the chart, SOL is trading just below $170. While this suggests strong momentum in the short term, investors should be wary of potential pullbacks given RSI levels and the increasing supply of tokens in the market. If the market begins to account for the dilutive effects of inflated supply, bullish momentum could wane and lead to price corrections.
Are smart whales investing in Solana?
On the other hand, the movements of investors with large amounts of assets, called “whales” in the cryptocurrency markets, can significantly affect the market. In this context, a recent development may give hope to Solana investors. According to the Twitter post of on-chain analysis platform Lookonchain, a smart whale invested a large amount in Binance, the world’s largest cryptocurrency exchange, on March 14.
If we look at the details of this investment, the whale purchased $67.92 million worth of SOL at an average price of $77. Later, it made an additional investment of 106 million dollars at an average price of 150 dollars. As a result of these transactions, the whale’s total earnings were recorded as 38.7 million dollars. Solana, one of the most rising altcoins of the past year, has entered an upward trend again in recent weeks. According to CoinGecko data, SOL has experienced a 23% price increase in the last week and is currently trading at $ 173.
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