Solana (SOL) price has rallied sharply today, mirroring similar upside moves elsewhere in the crypto market as traders focus on the likelihood of interest rate cuts in the coming months.
Jerome Powell’s dovish outlook boosts SOL price
SOL’s price has risen by around 10% in the past 24 hours to reach $158.85 on Aug. 24.
The gains follow Federal Reserve Chair Jerome Powell’s strongest indication in years that his efforts to combat inflation have largely been successful. His outlook has fueled speculation of forthcoming interest rate cuts.
For instance, as of Aug. 24, bond traders saw a 76% probability of a 25 basis point (bps) rate cut in September, up from 64% before Powell’s speech at Jackson Hole a day prior. Meanwhile, there is also a 24% possibility of a 50 bps rate cut in the same month.
Powell’s dovish outlook has led to a decline in the yields of both short—and long-dated US Treasury notes. Lower yields reduce the opportunity cost of holding government bonds, prompting investors to seek opportunities in non-yielding assets like stocks and cryptocurrencies.
Related: Past rate cuts indicate potential crypto bull market catalyst — 21Shares
In the past 24 hours, Solana, as well as the entire crypto market, has heeded these macroeconomic fundamentals.
Solana open interest, funding rates rise
Solana’s price gains today further coincide with its rising open interest (OI) and funding rates in the futures market.
According to data resource Coinglass, SOL’s OI was $2.19 billion on Aug. 24, up from $2.09 billion a day earlier. At the same time, its funding rates—calculated every eight hours—have risen to 0.0054% from 0.0028%.
The growth in Solana OI suggests that more traders are entering the market. The shift from negative to positive funding rates indicates greater demand for long positions (buying).
Related: Solana TVL hits near 1-year high — Will SOL price follow?
Together, these metrics show that traders are optimistic about Solana’s continued price appreciation, likely fueled by expectations of potential interest rate cuts.
SOL technical bounce
SOL’s ongoing rally is part of a broader rebound movement inside its prevailing symmetrical triangle pattern.
A symmetrical triangle is a continuation pattern that forms when the price consolidates within a narrowing range, marked by a descending trendline of resistance and an ascending trendline of support.
A resolution occurs when the price breaks out of the triangle in the direction of the preceding trend, often resulting in a move that mirrors the triangle’s height. As of Aug. 24, SOL bounced from the triangle’s lower trendline, eyeing its upper trendline at around $175 as the interim upside target for Septme.
A breakout above the triangle’s upper trendline, if confirmed by a rise in trading volumes, will likely send the price toward $325 by the end of 2024, up by over 100% from the current levels,
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.