Solana (SOL) Price Forecast: Network Usage Spikes Signals $120 Retest

 Key Insights:

• Solana (SOL) price wobbled below the $100 territory on Friday, Jan 19, but vital on-chain metrics are flashing signals of an imminent rally.
• Solana’s daily active addresses recently hit a 2024 peak of 429,000 users on Jan 17. 
• Fees accruing to Solana proof-of-stake validators have also been on the rise this week.

Following the Bitcoin Spot ETF approval verdict, Bitcoin dominance has dropped significantly. As investors redirect capital towards the altcoin markets, Layer-1 projects including Solana (SOL), Ethereum (ETH), and Cardano (ADA) have witnessed increased market demand. 

Can Solana bulls capitalize on the recent spike in network usage to push for a breakout above $120? 

Solana Network Activity Hits a 2024 peak 

At press time on Jan 19, SOL price is trading north of $93. This week, Solana bulls have fiercely defended the $90 support level amid intense volatility in the cryptocurrency markets. 

Vital on-chain data shows that Solana’s steady performance could be attributed to the substantial increase in its fundamental growth metrics this week. 

According to TokenTerminal, Solana’s daily active user count reached 429,162 addresses on Jan 17, its highest so far in 2024. Notably the last time Solana network activity reached these heights was on Dec 25, when SOL price briefly crossed $126. 

TokenTerminal’s active user count data tracks a blockchain network’s participation rate by aggregating the daily number of unique addresses that carried out valid transactions within a given period. 

A closer look at the purple trendline in the chart above shows how Solana daily active user count has been rising since Jan 15. 

An increase in daily active users on a layer-1 network like Solana is considered a strong bullish signal.

Firstly, it indicates that SOL’s recent growth performance is being driven by fundamental demand for products and services hosted on the Solana network, rather than mere price speculation among swing traders.

More importantly, such a prolonged increase in network participation rate, often evolves into a price rally as the new participants require the native token to deploy transactions.  

If this thesis holds, SOL traders can anticipate a breakout towards the $120 area in the days ahead. 

Solana node validators are earning record fees

Furthermore, there has been a significant rise in fees paid to Solana proof of stake validators. This invariably affirms the stance that Solana is currently experiencing a significant boost in network usage. 

The chart below shows that Solana stakers received a total of $314,789 in fees on Jan 14. But after 3 consecutive day of rising network demand, the fees soared to $519,885 at the close of Jan 17. 

The chart above clearly explains how rising network activity has seen fees accruing to SOL proof-of-stake validators increase significantly. Notably, stakers could now be incentivized to stake more SOL coins to capitalize on the rising fees. 

If this scenario plays out, that temporary reduction in Solana circulating supply will likely amplify the SOL price rally.

SOL Price Prediction: Can Solana price to Reclaim $120? 

From an on-chain standpoint, Solana price price uptick this week appears to be driven by the rising network usage. With these vital indicators still trending upward, SOL price looks poised to stage a rebound toward $120. 

The parabolic stop and reverse (SAR) indicator also affirms this bullish stance. This technical indicators examines historical trading patterns to identify potential reversal points in an asset’s short-term price trend.

As depicted below, the parabolic SAR dots for Solana currently point toward $106, which is well above the current SOL price of $98. When Parabolic dots points to a price level above the current market price, it suggests a growing bullish momentum. 

If the bulls can garner sufficient momentum to break past that initial resistance at $106, a move toward $120 could be on the cards. 

On the downside the bears could negate this optimistic Solana price prediction if they can force a downswing below $90. However, given the psychological significance of the price level, the bulls will likely make frantic efforts to cover their positions. 

But with the network demand still on the rise, SOL price will likely avoid such a large downswing in the short-term.