The Rise of Solana: A Strong Performer in the Crypto Market

The Rise of Solana: A Strong Performer in the Crypto Market

The cryptocurrency market has seen a surge in the price of Solana (SOL), the cryptocurrency that powers the high-performance, smart-contract-enabled Solana layer 1 blockchain protocol. Over the past week, SOL has experienced a 44% rally, testing the $60 mark. Currently, SOL/USD is trading around $59.5, showing a 5% increase for the day. However, the price has pulled back around 7% from its earlier session highs in the $64 area. Despite following the broader market trend, Solana has outperformed other cryptocurrencies and emerged as the best performer in the top 20 by market capitalization. This impressive performance has caught the attention of institutions and investors alike.

On-chain metrics for Solana indicate a significant increase in network activity. Recent data shows that the number of active addresses on the Solana network has been on an upward trend, reaching an average of around 270,000 over the past seven days. This is a substantial improvement from the all-time lows recorded in September, when the number of active addresses fell below 200,000. Additionally, the total dollar-denominated value of crypto locked in smart contracts on the Solana blockchain, or Solana’s TVL, has surged to over $2.1 billion, reaching its highest level since October 2022. This growth in on-chain activity indicates growing interest from market participants and institutions.

Multiple indicators suggest that institutional and sophisticated investors are returning to the Solana market. Coinglass reports that the Open Interest funding rate of opening leveraged futures positions has turned positive, reaching its highest level since at least May. This indicates disproportionate demand from bullish traders and suggests a renewed interest from institutional investors. Furthermore, the outstanding value of currently open Solana futures contracts, known as open interest, recently reached its highest level since April 2022, surpassing $770 million. The utilization of leveraged futures trading strategies by sophisticated investors aligns with the rising open interest and further confirms the resurgence of institutional interest.

Inflows from institutions have played a significant role in the Solana market’s resilience. Despite FTX selling between 250,000 to 700,000 SOL tokens every day for the past two weeks, the market has absorbed these sales without hindrance. Observations suggest that these tokens will likely be exhausted within a week, paving the way for a substantial surge in SOL’s price. As evidence of this, SOL has already pumped nearly 40% since the last tweet by user @Bluntz_Capital. With key resistance levels broken, SOL is poised to test the early 2022 lows around $75 in the near future. This potential milestone could see Solana’s price increase by an additional 30%, reinforcing the bullish sentiment surrounding the cryptocurrency.

Given the current bullish sentiment and the anticipated approval of spot Bitcoin ETFs, the broader market is expected to continue its upward trajectory into 2024. With institutions showing interest in Solana and on-chain activity on the rise, SOL is positioned to be a strong performer in the coming quarters. Despite its significant growth from its 2022 lows, trading at a multiple of over 7x, SOL still remains 77% lower than its 2021 highs of $260. This suggests that there is still significant potential for the cryptocurrency to rally further. With these factors in mind, it is not far-fetched to anticipate SOL reaching a price point of $100. As the tide of institutional interest grows and market conditions remain favorable, Solana is poised to continue its impressive upward trajectory in the crypto market.

Blockchain

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