Solana price staged a strong comeback on Thursday as investors cheered a new bridge in the ecosystem. SOL jumped to a high of $18.21, which was much higher than this month’s low of $13.56. It was among the best-performing cryptocurrencies on Thursday.
Solana and Ethereum bridge
Solana is a leading blockchain platform that was once the biggest players in industries like decentralized finance and non-fungible tokens. At its peak, its DeFi ecosystem had billions of total value locked (TVL). All this came tumbling down following the collapse of FTX and Alameda Research. The two companies were among the biggest contributors to its ecosystem.
The main reason why Solana price jumped is the launch of deBridge feature that allows Solana to communicate with Ethereum. This is the first time that the two ecosystems can communicate with each other.
They can also communicate with other Ethereum Virtual Machines (EVM) like Arbitrum and Optimism. Without this bridge, the alternative communication process is using wrapped and other derivative tokens. In a note, the founder of deBridge said that:
“Users and projects that needed to transfer liquidity to Solana have always faced limitations due to the lack of liquidity in Wormhole pools and high slippage during the exchange of the wrapped assets, which often made developers have to deal with non-liquid Wormhole assets.”
Solana price also jumped as signs emerged that the new management will relaunch FTX. As we have written before, the management is speaking with counterparties as it works to relaunch the exchange. It is not clear what this relaunch will mean for Solana and other companies that FTX had invested in like Near Protocol and Serum.
Solana price prediction
The daily chart shows that the SOL price has been under pressure in the past few months. This trend saw it drop to the January low of $13.35 this month. It has made a modest recovery and is now attempting to move above the 50-day moving average. It has also jumped above the resistance at $16.05.
The red flag I have with Solana is that this jump has not been accompanied by higher relative volume. Therefore, I suspect that it will be short-lived, which will see it drop to the support at $16. The only caveat for the bearish view is if Bitcoin stages a comeback above its year-to-date high of $31,400.