As of July 2024, the historical all-time high sol to pounds price was £98.5 (November 2021). The current price of £54 is 45% lower than that, but there are potential situations for the market to break through the new high. Technical analysis shows SOL/GBP’s weekly RSI (Relative Strength Index) is 52, which is within the neutral range. If it breaks the resistance level of £65 (April 2024 high), the potential on the upside will be to £80 (an increase of 48%). On-chain data indicate that the number of “whale” addresses holding more than 10,000 SOL increased by 18% during 2024, and their combined holding stood at 41%, higher than the bull market level of 2021 (37%), which may drive the price upwards intermittently.
Macro environment and regulatory framework provide factors: If the Bank of England decreases interest rates in Q4 2024 (market consensus 65%), expectation of pound depreciation can drive appreciation of sol to pounds exchange rate. In September 2023, when the UK inflation rate fell to 6.7%, SOL/GBP strengthened by 32% within one month. But in June 2024, when inflation was at 5.2% again, it dropped by 9%. Respect for regulation: when the UK FCA gives approval to the SOL spot ETF (still not on the agenda), institutional fund inflow may replicate the impact of the Bitcoin ETF – since BlackRock IBIT was listed, BTC increased by 72%, and SOL is able to do the same.
The key drivers are environmental growth and technological improvements: Solana Network will deploy the Firedancer upgrade in Q3 2024, with the aim of increasing the TPS to 1 million from 65,000 and reducing the failed transaction rate (currently averaging 8.2% daily). Historic data indicates that the BONK meme coin airdrop in April 2023 resulted in a 320% rise in Solana’s daily active addresses and propelled SOL/GBP 62% higher in one month. In May 2024, Helium Mobile users of DePIN in the Solana network surpassed 500,000 and the staked SOL surpassed 12 million (around £696 million). The value that was locked had accounted for 12% of circulating supply, alleviating market selling pressure.
Liquidity and sentiment metrics are on the plus: CoinGlass numbers indicate the SOL/GBP perpetual contract funding rate is currently at -0.02% (in favor of short sellers), but open contract volume has risen to 180 million pounds, close to the 2021 high figure of 210 million pounds, and the battle of bulls versus bears could widen volatility. During Q2 2024, UK-compliant exchange trading volume of SOL/GBP increased 47% quarter-on-quarter. Retail investor involvement (percentage of individual trades less than £1,000) improved from 35% to 58%, and continuous inflow of small amounts served as support.
Risk factors are systemic retreats and network breakdowns: The FTX collapse in 2022 saw a 72% decline in sol to pounds within 48 hours, while the Solana network congestion in March 2024 saw a 12% day-to-day decline. If the Federal Reserve resumes raising interest rates, the overall market capitalization of the crypto market will drop by 30% to 50%, dragging SOL’s price down. Quantitative models put the probability of SOL/GBP breaking a new high by the end of 2024 at 38% (based on 100,000 Monte Carlo simulations), but it needs to break through £80 and sustain for three months to confirm the trend.
Institutional trends provide direction: MicroStrategy purchased 50,000 SOLs in Q2 2024 (average price £48), which accounts for 15% of its crypto position. Trend-following buying is initiated if the price drops below £70. Wintermute market maker model utilizes the following as per it: with every 10% increase in SOL/GBP volatility, high-frequency arbitrage return can be improved by 1.2%, and quantitative funds would step in and increase the volatility. When British pension funds invest 1% of their portfolios in SOL (£24 billion or so), hypothetical buying would raise the price by 210%, but compliance hurdles make this difficult short-term.
in short, for sol to pounds to penetrate its all-time high level, some conditions have to resonance: the upgrade of Firedancer (70% chance), starting the cycle of interest rate reductions in the UK, the expected heating of ETFs and the ecological explosion (e.g., the DePIN user reaching over one million). For short-term strategies, one can aim for the range of £55 to £65. If the close each week above £68 (2023 resistance) holds on for two weeks consecutively, there is 55% probability of a new high. For the other, the breakdown of below £45 (support in 2024) will open room to the downside to £30 (45% pullback).