Solana‘s price saw a significant increase of over 60% in the week ending December 24, reaching $118 for the first time in eighteen months. This rally coincided with a spike in Ethereum‘s gas fees, prompting discussions about the future dynamics between these two blockchain ecosystems.
Ethereum’s transaction costs briefly soared above $10 earlier in the week, leading to instances where users paid $150 in fees for a $50 transaction. However, these fees later dropped by more than 50% from their weekly high, which encouraged users to explore alternative blockchain platforms with lower transaction costs.
The shift in user activity towards platforms like Solana has been reflected in the price of its native token. Data from Messari shows that while Ethereum’s ecosystem saw a 3% increase in active addresses, Solana’s active addresses surged by approximately 400% over the last three months.
Recent airdrop events within the Solana ecosystem have been largely responsible for the increase in daily active addresses and the price of SOL. Additionally, Solana’s decentralized exchange volume peaked this week, indicating growing ecosystem activity.
The low transaction costs in the Solana ecosystem facilitate the creation of new addresses, benefiting users, especially airdrop hunters. Despite some social media criticism about network congestion, Solana’s transaction fees have consistently remained below $0.01, as reported by blockchain data analysis platform CoinCodex.
Despite the positive developments, technical indicators suggest that Solana’s price increase might slow down. There is a divergence on the three-day chart where SOL’s price is making higher highs, but the Relative Strength Index (RSI) and volumes are making lower highs, hinting at a potential bearish trend. If sellers take control, SOL’s price could drop towards the 0.382 Fibonacci level near $100 by the new year, with further declines potentially leading to the 0.236 Fib line near $66. Conversely, a close above the 0.5 Fib line around $130 could push the price towards the 0.618 Fib level at approximately $157.50.