As a seasoned researcher with years of experience in the cryptocurrency market under my belt, I find the recent developments surrounding Solana intriguing. The surge in its price and the clarification from co-founder Anatoly Yakovenko on the fee dynamics have added a layer of complexity to the narrative.
On the weekend, Solana’s price climbed 2% to reach $145, marking a more stable period. The optimistic viewpoint was strengthened as Bitcoin tried to reclaim the $60,000 significant milestone. Yet, if Solana’s price continues to form a bullish pattern flag, it could potentially sustain a recovery lasting until the end of August.
Solana Price Holds Steady as Yakovenko Clarifies Fee Dynamics
Anatoly Yakovenko, one of the co-founders of Solana, has recently set the record straight about a common misunderstanding regarding the SOL Network’s capacity and transaction processing. In a tweet, Yakovenko explained that Solana’s blocks are currently not at full capacity, which was previously thought to be due to network congestion in the past.
Anatoly pointed out that with increasing interest, individuals are prepared to shell out significant amounts to secure access to particular blockchain states. This trend is competitive since users prioritize swiftness and exclusivity, frequently for monetary benefits. Consequently, boosting capacity using Layer 2 (L2) solutions or Zero-Knowledge Proofs (ZKPs) won’t automatically reduce fees for those aiming for priority access.
Amid the tweet, the Solana price showcased sustainability above the $140 level.
As a researcher delving into this topic, I concur with Yakovenko’s perspective that the dynamics of fees in our current system are not solely dictated by basic support and demand for block space. Instead, they are intrinsically connected to user incentives, with profit potential playing a significant role. This profit potential often fuels the desire for a Layer 2 (L2) scaling solution. In essence, L2 providers strive to capitalize on these high-demand ‘hotspots’ within the network where transaction requests are particularly high.
Wrong assumption!
Solana’s blocks aren’t yet at their maximum capacity. Users are ready to pay high transaction fees to secure priority access to certain states. Expanding capacity through Layer 2 solutions (L2s) or Zero-Knowledge Proofs (ZKPs) won’t necessarily lead to fee reductions for these users.
People want to launch L2s so they can make a profit providing…
— toly | compressed (@aeyakovenko) August 17, 2024
Although a more diverse market can offer multiple choices for users, it doesn’t automatically lead to reduced costs along the main network.
SOL Price Forms Bull Flag Pattern
The forecast for Solana’s price suggests it is currently in a period of consolidation, moving between approximately $110 and $200. This broad range indicates a significant possibility for increased volatility.
As the market continues to rise, a bullish flag formation appears on the Solana (SOL) price graph. This bullish flag pattern suggests that the upward trend may continue for an extended period. A bullish flag is a technical chart pattern that typically indicates a continuation of the prevailing bullish trend.
Presently, the flag formation suggests an ongoing bullish trend, and the Solana (SOL) is being traded at approximately $145.36, showing a rise of around 2.42% within the day.
If the bull market finds the resistance trendline at approximately $180 for Solana, it suggests a 24% growth potential. In an optimistic scenario, should the bullish breakout occur above this resistance trendline, it significantly boosts the likelihood of Solana reaching and potentially surpassing the psychological barrier of $200, aiming for the target of $250.
Concerning the technical indicators, the daily RSI (Relative Strength Index) line demonstrates a potential bullish turnaround as it approaches the oversold level at 30%. At present, this line is moving sideways just below the midpoint, but if it forms a double-bottom pattern, it could signal an ongoing upward trend.
When it comes to Bollinger Bands, the current price (SOL) is approaching the 20-day Simple Moving Average (SMA), which also serves as the midline. Notably, the upper and lower boundaries of these Bollinger Bands are getting closer together. This suggests that the indicator is in a contracting phase, possibly indicating an imminent increase in the trend’s momentum on either side, potentially leading to a swift shift in direction.
Contrary to the optimistic viewpoint, should the Solana price not maintain the $110 support following a reverse at $150, it’s probable that the price of SOL will decrease to around $80.
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2024-08-18 19:20