Solana price nearly crashes 15% in 24 hours; analyst says not to expect a new ATH anytime soon

●Solana price crossed the $100 mark over the weekend to imbue optimism in investors of further gains.

●The altcoin, however, corrected by 7%, nearly extending the dip to 15%, suggesting that the market is overheated.

●Analyst have noted that Solana climbing back to its ATH of $260 may not be achievable as supply has increased by 100 million SOL.

Solana price has been making a splash over the past few days overtaking Ripple and Binance Coin to become the fourth biggest cryptocurrency in the world. However, according to a popular analyst, SOL’s bull run will still not be enough for the altcoin to note an all-time high as the market has become significantly concentrated now.

Solana price may not make it to the top

Solana price is presently trading at $112, rising by more than 1000% in the past 12 months. The cryptocurrency has emerged as one of the best-performing assets in 2023, but even after such growth, SOL has a very bleak chance of making it to its all-time high.

The reason behind this is the increase in supply relative to its value. Back in November 2021 when Solana price hit its all-time high of $260, the total market capitalization of the asset was around $78 billion. Today, despite the value of the crypto asset being less than half of what it was at the top, the market cap is nearly $50 billion.

Solana market capitalization, Souce: CoinMarketCap.

The reason behind this is the increase in the supply of Solana by more than 100 million SOL over the past two years. For the altcoin to be worth $260 again, the market cap would need to be at $111.2 billion, which seems rather difficult even with institutions pouring billions into the asset.

This opinion was reiterated by popular analyst Duo Nine, who, in a tweet, noted that for SOL to hit $260 today, the market would need dilution, which would require a lot more buyers. Even though crypto adoption is expanding, pumping over $65 billion into an asset is still rather difficult.

Hence, the best option for investors would be to tap out when SOL crosses the $78 billion market cap price point and begins slowing down its rally, as that could be the saturation point for Solana.

Solana price could see a correction

Solana price trading at $112 at the time of writing, failed the breach of $120 resistance despite rallying over the weekend. The primary reason behind this is the likely overheating of the market. According to the Relative Strength Index (RSI), SOL is presently overbought due to the past rally.

This means that the market would need to cool down before resuming its rally, which has historically seen potential corrections. Furthermore, the bullish momentum is waning right now, as evidenced by the receding green bars of the Moving Average Convergence Divergence (MACD).

Thus, Solana price could likely see a drawdown to $100 or lower until the market cools down, after which it would have enough strength to rally again.

SOL/USD 1-day chart, Source: TradingView.

However, if the bulls continue to charge the altcoin ahead of the potential spot Bitcoin ETF approval of January 10, SOL could flip the $121 resistance into support. This would invalidate the bearish thesis and set Solana price up for further increase.