The surge in Solana’s price this week aligns with a rise in gas fees within the ecosystem of Ethereum, its layer-one blockchain rival. Particularly, the expense for executing a transaction on the Ethereum blockchain briefly surpassed $10, with some users reporting being charged $150 for a $50 transaction.
Ethereum gas fees have plummeted by more than 50% since the blockchain’s week-to-date high. However, the recent uptick has promoted users to seek alternative blockchain platforms with lower transaction fees. This has been the motive behind Solana’s price rise over the past few months.
Specifically, the number of active addresses on Solana have increased by almost 400% in the last 3 months, compared to a 3% increase on Ethereum, as per Messari.
Certainly, the recent airdrops on the Solana blockchain, particularly the Bonk memecoin, play a significant role in the increase in both its daily active addresses and price. Furthermore, the decentralized exchange volume of Solana has notably ascended to the forefront this week.
Solana’s lower transaction costs have been particularly beneficial for airdrop hunters. For instance, Solana’s fees have been consistently below $0.01, according to CoinCodex. However, some have different perspectives regarding the costs of their own.
Still, the surge in Solana’s performance this week follows a successful period in fund flows. Specifically, investment funds centered around Solana garnered $10.6 million in the week ending December 16, surpassing the inflows observed in leading counterparts such as Bitcoin & Ethereum. In December, Solana funds experienced a noteworthy $14.1 million in inflows, marking the highest figure in the cryptocurrency sector.
However, SOL price could be running out of steam this week. On the 3-day chart, SOL’s price has formed a higher high, yet its relative strength indicator (RSI) and volumes have revealed lower highs. Technically, this suggests an emerging bearish divergence, hinting at a possible upcoming selloff. If the bearish trends prevail, SOL’s price risks decline toward its 0.382 Fib line near $100 by New Year’s. A decisive close below $100 may promote the price towards the 0.236 Fib line near $66.
By contrast, a close above the 0.5 Fib line at around $130 may push the price rallying toward the 0.618 Fib line near $157.50.