As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed bull runs, bear markets, and everything in between. The recent surge of Solana’s native token, SOL, has caught my attention, especially given its impressive 35% increase within six days.
Between October 5th and October 11th, Solana’s primary token, SOL, experienced a significant increase of approximately 35%, peaking at $222 – its highest point since late December 2021. This growth has sparked debate among traders, who are now wondering if the record high of $260 might be achievable. Such speculation heightens when Bitcoin (BTC) surpassed $84,500, fueled by continuous institutional investments and optimism around potential regulatory clarity in the United States.
Over the past six days up to October 11th, Solana (SOL) has surpassed the broader cryptocurrency market, experiencing a growth of approximately 33%. This surge in SOL’s performance can be attributed in part to the growing interest among investors, driven by an increase in smart contract activity on the Solana network. This rise is clearly demonstrated through the Total Value Locked (TVL), which serves as an indicator of this trend.
On October 10th, the Total Value Locked (TVL) on Solana reached an all-time high of $7.6 billion since December 2021. This remarkable increase was mainly fueled by popular decentralized applications (DApps) such as Jito, Raydium, Drift, and Binance’s liquid staking, which collectively accounted for a 36% surge in deposits.
Solana’s activity increase is not limited to memecoin trading
There is some valid criticism regarding Solana’s heavy dependence on memecoins, including Dogwifhat (WIF), Bonk (BONK), and Popcat (POPCAT), all of which have surpassed the $1.5 billion market capitalization threshold. Decentralized token launch platforms like Pump.fun have been the main drivers behind the increase in Solana decentralized exchanges (DEX) volumes.
Weekly DEX volumes on Solana surged to $17.1 billion in the week ending Nov. 2, a figure not seen since March 2024, and corresponding to a 26% market share, surpassing even the leading DApp-focused blockchain, Ethereum. Solana also managed to capture $88.2 million in monthly fees, which is vital for addressing network security concerns.
As an analyst, I’ve noticed some interesting fee-earning statistics across various blockchains. For instance, the Ethereum network, boasting a Total Value Locked (TVL) over 7 times that of Solana, has generated approximately $131.6 million in monthly fees. Similarly, Tron, a blockchain focusing on base layer scalability, raked in around $49.1 million in fees during a 30-day period.
Assessing platforms merely based on Total Value Locked (TVL) and fees may lead to misunderstandings, as not all Decentralized Applications (DApps) require large volumes to be meaningful. Nevertheless, these factors are essential for adoption and luring new users, which paves the way for long-term growth and increased interest in accumulating and using Solana (SOL).
Example: Magic Eden, the top non-fungible token (NFT) marketplace for Solana, has been active at approximately 77,160 unique addresses in the past month, according to DappRadar’s latest report. In comparison, OpenSea – a similar platform on the Ethereum network – had about 37,940 active addresses over the same period.
The information presented clearly demonstrates that the Solana network is drawing in users even beyond the hype surrounding meme coins, which could potentially lead to additional advantages for SOL’s price. Yet, it’s crucial to examine the SOL futures contracts to ascertain whether traders are overextending their positions.
In simpler terms, when the funding rate is positive, it means that those who hold long positions (buy) are essentially paying a fee for borrowing leverage, which usually varies between nothing and 2% per month in normal markets. The spike to 5% on November 10 indicated an excess of enthusiasm but temporary, as the latest data from November 11 shows that the cost of using leverage monthly has returned to a neutral level of approximately 1.8%.
As a crypto investor, I find myself optimistic about Solana (SOL) based on its on-chain and derivative indicators. The surge in network activity and the absence of overextended leverage suggest that SOL could potentially reach new all-time highs.
This piece is meant to provide a broad understanding and isn’t intended to serve as legal or financial guidance. The ideas, perspectives, and opinions shared by the author may not align with those held by CryptoMoon.
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2024-11-11 23:34