But is the Solana native token anticipating a big price correction ahead?
Solana blockchain’s native asset, SOL, soared to a new record high on Monday.
The SOL/USD exchange rate rose by 26.12% to $65.467 on the Binance exchange after traders assessed a flurry of infrastructural developments in the Solana ecosystem, including a recent $70-million crowdfund to support its blockchain-powered decentralized exchange, Mango Markets.
Solana ecosystem upgrades
Mango offers a platform for spot markets, lending and perpetual futures. It sources liquidity from its native pools and Serum, another Solana blockchain-based exchange, which is backed by billionaire Sam Bankman-Fried’s FTX.
The working model is very similar to other successful, Ethereum-based decentralized exchanges such as Uniswap and SushiSwap.
Other optimistic updates involved the Aug. 9 launch of Wormhole, a communication protocol between Solana and other top decentralized finance projects, including Terra, Ethereum and Binance Smart Chain, and the SOL-powered sales of the Degenerate Ape Project’s 10,000 nonfungible tokens (NFT) over the weekend.
“The very first day has already had over 200k SOL traded not even 24 hours in,” market analyst Pentoshi tweeted on the NFT sale on Solana marketplace Solanart.
Crypto market influence
The latest bull run in the Solana market also appeared as gains in top cryptocurrencies slowed down.
Both Bitcoin (BTC) and Ether (ETH) stopped their upside booms midway on overvaluation risks, with their relative strength index (RSI) indicators returning readings above 70, a sign that traders consider these assets overbought.
Meanwhile, alternative cryptocurrencies picked up their upside momentum in the wake of Bitcoin’s and Ether’s flat price action.
For instance, the last seven days saw Solana surging by 57%, much in line with XRP, which also climbed 57%. Ethereum’s top rival, Cardano, also reported a 47% spike for its native asset ADA, while meme cryptocurrency Dogecoin (DOGE) rose 34% on fresh Elon Musk and Mark Cuban endorsements.
Top 10 crypto assets' performance. Source: Messari
But like Bitcoin and Ether, Solana now appears to be facing the same overvaluation risks.
As on Monday, the SOL/USD’s daily RSI reading reached 84, raising profit-taking risks even though optimistic fundamentals ensured bullish backstops to the pair’s ongoing price rally.
SOL/USD daily price chart featuring its overbought RSI. Source: TradingView
In previous instances, an RSI-led sell-off had SOL test its 50-day exponential moving average as support. The wave currently sits around $36.56, down 41% from SOL’s price at the time of writing.
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