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The price of Solana (SOL) reached its highest level in 2 years but remains undervalued. here's why

Last Solana Price sensation In the digital currency market at the end of 2023 after breaking the $100 barrier. Currently, the price is trading at the $144 level, but it still has a long way to go to reach a new all-time high.

It appears that the altcoin may not have enough capacity to move forward after the recent rally. However, it should be noted that Solana is still undervalued The truth.

Solana price could continue to rise

Increased price Solana is up 45% over the past two weeks, reaching $144 at the time of writing. In general, these rebounds tend to be short-lived as crypto assets lose momentum due to saturated bullish sentiment or profit-taking. But SOL seems to stand out as a different case.

NOW, relative strength index(RSI) It crosses the threshold and enters the overbought zone. Looking at historical data, we can see that the price of SOL tends to increase immediately after entering this zone. Depending on market conditions, these increases have ranged from 300% to 400%.

SOL/USDT 1-day chart
SOL/USDT 1-day chart | Source: Trading View

While a 300% rally may not be on the horizon, investor support could push Solana's price higher. A break of the resistance level at $150 would open the door to an increase to $168. This price corresponds to the 50% Fibonacci retracement from $248 to $89. Turning this level into a support floor would give Solana the momentum needed to reach $200.

Is Solana SOL undervalued?

Technical and historical data aside, Solana's value is fundamentally much lower than it should be. This is the conclusion drawn from the price-to-sales (PS) ratio of a digital currency.

The PS ratio compares a cryptocurrency's market capitalization to network revenue or trading volume. A low ratio means the cryptocurrency is undervalued and vice versa. Despite the recent rally, Solana SOL is still undervalued according to this indicator.

Altcoin value did not increase during downturn that lasted Approximately 12 months from mid-2022 to mid-2022 2023. As the end of 2023 approaches, network revenues have failed to catch up with the rapidly growing market value. This led to Solana being undervalued.

Therefore, this means that the altcoin still has a lot of room to grow and could rise further.

Ratio PS Solana
PS Solana Report | Source: Token terminal

Additionally, the digital currency also enjoys significant support from investors who are likely to flock to it to benefit from the continued rise. The address formation rate on the Solana blockchain has increased by 41% over the past two weeks.

New Solana addresses | Source: The block

This is a positive development, as the growing number of investors leads to an increase in on-chain transactions, offsetting the downward trend caused by profit-taking.

Solana Price Prediction: Are There Chances of a Correction?

Since the market is growing slowly, the bullish momentum could soon fade if it does not secure a support floor. Currently, this floor is at the $150 level, which is also a crucial psychological support level.

If Solana price fails to cross the $150 level, it could fall to $126 and profit taking at this time could intensify the downtrend. A loss of the $126 support zone would completely invalidate the bullish thesis and Solana SOL costs $100.

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