Solana Traders Increase Leverage 150% as Grayscale Launches XRP Trust

Solana Price Analysis:

Solana price rose above $130 on Sept 11, as bullish tailwinds from news of Grayscale adding XRP to its cryptocurrency trust offerings propelled the broader Layer-1 altcoin markets.

Solana Price $130 Resistance Amid XRP Surge

On Sept 12, Grayscale, one of the world’s largest digital asset manager announced the decision to add XRP to its cryptocurrency trust.

Cryptocurrency trusts are ETF-like products that allow TradFi investor gain direct exposure to a cryptocurrency assets, but on restricted to accredited investors and not the general public.

While, launch of Bitcoin ETFs stole the show in H1 2024, it appears that the recent approval of Ethereum ETFs in July 2024 has now spurred global demand for cryptocurrencies beyond the pioneer coin.

Notably, before XRP, Grayscale had recently added prominent tokens like SUI and MakerDao (MKR) to its burgeoning portfolio of cryptocurrency Trusts, within the last 2-months.

Hence, the addition of XRP on Sept 12, further emphasizes growing global demand for altcoins.

As did SUI and MKR in the aftermath of the Grayscale Trust listing, XRP price rallied 5%, reaching a new monthly timeframe peak. But unsurprisingly, the bullish sentiment from the news also spread across to other altcoins.

Like the rest of the crypto markets, Solana price has been on a steady uptrend, amid multiple dovish macroeconomic indicators posted by US authorities in the past week.

Between Sept 6 and Sept 11, Solana price scored double-digit gains, but failed to establish a steady support base above the $130 level.

However, the $130 resistance caved again on Friday Sept 13, thanks to bullish news catalyst involving Grayscale and Ripple (XRP). At the time of writing on Sept 13, SOL price is hovering above the $133 level, up 13% for the week.

Solana Funding Rate Surges

Looking beyond the price action, other critical market indicators show Solana traders are anticipating further upside in the coming days. Following Grayscale’s announcement of the XRP trust, SOL traders were spotted deploying significantly higher leverage on their LONG positions.

Indicative of this, the Coinglass chart below shows real-time changes in SOL Funding Rate, a measure of leverage payments between LONG contract holders and SHORT traders.

Looking at the chart above, Solana funding rate trended in negative values for the better part of the last 3-days. But that trend flipped positive on Sept 12.

Within the last 24-hour SOL funding rate has increased from -0.005% on Sept 12 hit 0.0025% at the time of publication on Sept 13, reflecting a 150% surge fees paid by long traders to short contract holders.

A surge in funding rate rise when LONG traders begin paying higher fees to keep their leveraged bullish positions open, in hopes of locking in larger gains if price move upwards. Hence this surge in SOL funding rate signals rising confidence among Solana bull traders.

Solana Price Forecast: $150 Target in Focus

If they opt to back up their leverage LONG positions with rapid spot purchases, Solana price could be on the verge of a breakout towards $150 in the days ahead.

Having established a steady support base above the $130 area, technical indicators also further support he bullish stance.

As seen in the chart below, the Donchian Channel indicator, which plots the highest and lowest price points over a specific period, is showing Solana ranging between $120 and $162.

The wide range suggests that SOL still has ample room to test higher levels. A break above the $141.32 resistance zone could serve as the next catalyst for Solana’s short-term rally.

Meanwhile, the Directional Movement Index (DMI) offers more insights. With the positive directional index (orange line) at 25.18 above the negative directional index (blue line) at 14.64, this indicates a prevailing bullish trend. However, traders should note the weakening momentum, as the ADX is nearing a tipping point.

In terms of support levels, Solana’s critical short-term price floor lies around $120.62. A break below this could invalidate the short-term bullish outlook.

On the upside, Solana needs to close decisively above $141.32 to sustain its momentum toward the $150 target, with the $162 mark serving as a longer-term resistance level.