Bittime – Solana (SOL) is heading towards an important milestone, namely market capitalization that is close to an all-time high (ATH) at $80 billion.
However, this achievement is overshadowed by fundamental issues that receive less attention, such as SOL token inflation.
The following is an explanation of the problems that arose when Solana reached ATH.
The problem when Solana ATH
What are the problems that arise when Solana experiences ATH? You can listen to the following explanation.
1. Token Value and Market Sentiment
The number of tokens in circulation has increased drastically from around 300 million to 443 million since the last bull market. This increase in supply can have a significant impact on the value of the token and investor sentiment.
2. Token Inflation
Token inflation can lead to a decline in value. As the crypto supply increases rapidly without being offset by a commensurate increase in demand, the intrinsic value of the token can be diluted.
For long-term SOL holders, this inflation means their ownership of the network's market capitalization is reduced. This is similar to companies that issue more shares, so the value of existing shares tends to fall unless the company's market valuation increases proportionally.
3. Solana Price Chart
Nonetheless, the Solana price chart shows a strong uptrend. SOL price continues to climb, consistently receiving support from the moving average (moving average) which is unidirectional and uphill. This is a bullish indicator. Notably, the 50-day moving average has served as a price band, helping its rise.
4. Overbought Occurred
The latest price candle shows a rapid increase in the value of SOL, hinting at a bullish market sentiment. However, the increase in trading volume that accompanies the price increase can be a double-edged knife.
On the one hand, this shows strong buying interest, but on the other hand, it raises concerns about potential overbought conditions, especially as the Relative Strength Index (RSI) is heading to the overbought region. Currently, SOL is trading just below the $170 mark.
5. The Delusional Effect of Supply Inflation
Although the short-term momentum looks strong, investors should be wary of potential price declines, given the RSI level and increased token supply in the market. If the market starts to account for the dilution effect of supply inflation, bullish momentum could weaken, leading to a price correction.
Check the Crypto Market Today:
Strategy to Face the Rise and Potential for Solana Correction
Despite token inflation and potential price correction, Solana still has an attractive prospect. Here are some strategies that investors can consider:
1. Long Term Investment
Investors who believe in Solana's future and the long-term potential of its blockchain ecosystem can consider a buy-and-hold strategy.
The focus on Solana's utility and adoption in the DeFi (Decentralized Finance), NFT (Non-Fungible Token) and Web3 space can provide a more complete picture of the intrinsic value of SOL tokens beyond current supply inflation.
2. Dollar-Cost Averaging (DCA)
The DCA strategy involves periodic gradual investments of a certain amount. This can help investors reduce the impact of short-term price fluctuations and acquire SOL at various price points.
3. Careful Technical Monitoring
Investors are advised to monitor technical indicators such as RSI, moving average, and trading volume periodically. Excessive increase in RSI or significant decrease in volume can be a warning signal of a potential price correction.
4. Investment Diversification
It is not wise to put all the eggs in one basket. Investors are advised to diversify their crypto assets. This can help reduce the risk of loss if the SOL price undergoes a significant correction.
5. Fundamental Research
It is important to keep abreast of the development of Solana and its ecosystem. This could include the latest news about the adoption of Solana blockchain technology, strategic partnerships, and new product launches. Good fundamental research can help investors make more informed investment decisions.
Also Read How to Buy Crypto:
Conclusion
In conclusion, the Solana price increase towards ATH is overshadowed by the issue of unresolved token inflation. Investors need to look closely at technical indicators such as the RSI and volume trends to measure potential future price corrections.
Solana's price increase towards ATH should be wary of the potential correction due to token inflation. However, Solana's long-term outlook remains promising.
Investors can implement a careful investment strategy and keep abreast of the Solana ecosystem to maximize profits while managing risk.
How to Buy Solana (SOL) on Bittime
You can buy and sell Solana (SOL) in an easy and safe way through Bittime. Bittime is one of the best crypto applications in Indonesia that has been officially registered with Bappebti.
Solana (SOL) is available on Bittime with SOL/IDR market pair. To be able to buy SOL IDR on Bittime make sure you have registered and completed identity verification. In addition, also make sure if you have enough balance by depositing a certain amount of funds into the wallet. For your information, the minimum purchase of assets on Bittime is Rp10,000. After that, then you can buy crypto assets in the application.
Learn the complete guide on how to buy Solana (SOL) on Bittime.
Monitor the price chart movements of Solana (SOL), Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies to find out today's crypto market trends in real-time on Bittime.
Also Read:
Solana (SOL) 2024: A Comprehensive Guide for Beginners
In the Middle of Rising, Will Solana (SOL) Reach ATH Again?
Solana (SOL) Price Surges 19% in a Week, Is $120 the Next Target?
DISCLAIMER: This article is of an informational nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. The price of crypto assets is volatile, where the price can change significantly over time and Bittime is not responsible for changes in fluctuations in the exchange rate of crypto assets.
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