In recent developments, Solana’s native cryptocurrency, SOL, has witnessed a remarkable surge of approximately 20% within a 24-hour span. This surge has positioned SOL at the forefront of major cryptocurrencies in an otherwise fluctuating market. Notably, Solana price soared past the $63 mark, a high not seen since May 2022. This bullish trend coincided with a significant increase in trading volumes, which escalated to over $3.5 billion. This figure marks an increase of more than 70% from the beginning of November, where average daily trading volumes hovered around $2 billion.
This upward trend in SOL’s price can be partially attributed to the diminishing concerns regarding potential sales by FTX, a major cryptocurrency exchange. In the backdrop of these events, Sam Bankman-Fried, a prominent supporter of Solana and the founder of FTX, faced legal challenges. His trial concluded with a guilty verdict on multiple charges, which initially cast a shadow over Solana’s prospects. However, the sentiment surrounding Solana has significantly improved since then.
SOL and the institutional attention
Despite the movement of approximately $102 million worth of SOL tokens from wallets linked to FTX to various crypto exchanges, the price of SOL has continued its upward trajectory. This movement was initially interpreted as a potential sign of market sales. Analysts and market observers are now speculating that the FTX estate may be nearing the end of its SOL holdings, based on insights from on-chain analytics.
Institutional interest in SOL also seems to be gaining momentum. For instance, the Grayscale Solana Trust (GSOL) shares recently witnessed a staggering 900% premium compared to the spot value of SOL, suggesting a high demand among regulated funds. Furthermore, Cathie Wood, CEO of ARK Invest, highlighted Solana’s potential in a CNBC interview, noting its technical superiority over Ethereum in terms of speed and cost-effectiveness.
From a derivatives market perspective, SOL’s robust 39% weekly gains have propelled its futures open interest to $745 million, a peak not seen since November 2021. A deeper analysis of the futures funding rate for SOL indicates a balanced demand between leverage longs and shorts, with a current 0.5% weekly cost for leverage longs. This rate, while notable, aligns with the ongoing bullish momentum.
The ecosystem
Beyond the derivatives market, the Solana ecosystem itself is showing signs of healthy growth. The total value locked (TVL) in Solana’s smart contracts has reversed its previous declining trend, and deposits in Solana’s decentralized applications (DApps) have increased by 10% in recent days. Moreover, Solana now ranks as the fourth-largest blockchain in decentralized finance (DeFi) TVL, with a significant 28% growth in the number of active addresses. This growth contrasts with a decline in active users on competing platforms like Ethereum.
Despite these positive developments, some investors remain cautious. Solana’s market capitalization has significantly outpaced that of Polygon, despite having comparable DeFi TVL, leading to questions about the sustainability of SOL’s current price level. Additionally, when compared to other chains like BNB Chain, Solana’s accumulated 30-day fees are relatively modest, which could impact its valuation following the recent rally.
In conclusion, while the current trend for SOL appears optimistic, with no excessive leverage observed in derivatives contracts, the fundamental indicators suggest a limited scope for further significant price increases.
What is Solana?
Solana is a blockchain platform designed for high-speed transactions and efficient decentralized applications (DApps). It distinguishes itself with its unique consensus mechanism combining Proof of History (PoH) and Proof of Stake (PoS), which enables it to process transactions at remarkable speeds while maintaining low costs. This makes Solana an attractive platform for various applications, from decentralized finance (DeFi) to non-fungible tokens (NFTs). The SOL token is used to pay for transaction fees and staking within the Solana network.
Solana Price Prediction
Predicting the future price of cryptocurrencies is inherently challenging due to the volatility and numerous factors influencing the market. However, analysts often make Solana price predictions based on technical analysis, market trends, and other prediction tools. For Solana, its strong technological foundation, increasing adoption, and growing ecosystem might suggest a potential for continued growth in value. However, investors should approach these predictions with caution and consider the inherent risks and uncertainties in the crypto market.
How to Buy Solana
Purchasing Solana (SOL) involves a few key steps and most major exchanges have precise instructions on how to buy Solana. However, for the purpose of this article you can consult with the following:
- Choose a Cryptocurrency Exchange: First, select an established cryptocurrency exchange. Gate.io is a good reputable example of such.
- Create and Verify an Account: Register for an account on the chosen exchange and complete any required verification processes, which may include providing personal information and documentation.
- Deposit Funds: Once your account is set up, deposit funds into it. Most exchanges accept deposits in the form of fiat currencies (like USD, EUR, etc.) or other cryptocurrencies.
- Purchase SOL: With funds in your account, you can now buy SOL. This is typically done by selecting SOL from the list of available cryptocurrencies and executing a buy order at either the current market price or a specified limit price.
- Secure Storage: After purchasing SOL, it’s crucial to store it securely. While you can keep it in your exchange wallet, for enhanced security, consider transferring it to a personal wallet, such as a hardware wallet or a software wallet specifically designed for Solana.
