As a seasoned crypto investor with a knack for spotting trends and a portfolio that has weathered multiple market cycles, I can confidently say that Solana’s (SOL) recent performance is nothing short of intriguing. While the 8% surge since its dip to $222 on Nov. 26 might not seem impressive at first glance, it’s important to consider the bigger picture.
The native token of Solana, known as SOL, has climbed approximately 8% since dipping to $222 on November 26. This upward trend, while welcomed by many investors, has not entirely quelled doubts among some, who point to the steep decline from its peak of $263.80 on November 23 as a possible indication of an impending weakening bull market. However, data from blockchain and derivatives markets hint that SOL could still have substantial room for growth in the future.
Investors’ discontent, to some extent, arises from Solana’s minimal 1% increase between November 20th and November 27th, while the overall value of altcoins grew by 12%. Notably, several tokens demonstrated exceptional growth during this timeframe, with Stellar (XLM), Celestia (TIA), Fantom (FTM), Uniswap (UNI), and Polkadot (DOT) recording gains exceeding 40%.
Identifying the precise factor driving changes in investor feelings can be tricky, but for those holding SOL, it’s advisable to concentrate on Solana’s robust fundamentals. The network has established itself as the second-most active programmable blockchain among developers and users. Reinforcing this expansion, Solana’s Total Value Locked (TVL) surged by 48% in the month preceding Nov. 27.
For context, during the past 30 days, deposits on the BNB Chain rose by 14%, and the Tron network’s Total Value Locked (TVL) saw a growth of 13%. On the Solana network, notable metrics include Jito liquid staking solution at $3.4 billion with a 44% increase, Jupiter decentralized exchange at $2.4 billion, up by 50%, and Raydium at $2.2 billion, showing a 58% rise. This significant growth in deposits indicates the escalating interest in SOL, fueled by its rapidly expanding Decentralized Application (DApp) ecosystem.
Solana and Ethereum thrive in separate niches
Although some analysts suggest that SOL competes with Ether (ETH), data indicates that both networks can grow independently. Onchain activity on Ethereum increased 47% in the last 30 days, according to DappRadar. Uniswap volumes on Ethereum surged 62% during the period, while CoW Swap recorded a 71% gain.
On the memecoin front and trading activities, Solana is leading the charge. However, when it comes to decentralized finance (DeFi) possibilities, Ethereum remains the preferred network. It’s worth mentioning that three of the top five highest-earning Decentralized Applications (DApps)—Raydium, Jito, and Pump.fun on Solana—have surpassed the earnings of Lido, Uniswap, and Aave, Ethereum’s top performers, in this specific metric.
Solana and Ethereum can expand separately without necessarily clashing for the same audience. Yet, it’s important to note that Solana has a higher degree of risk associated with it due to its involvement with memecoins. The wild excitement surrounding tokens like BONK, POPCAT, MEW, and SPX6900 – some of which skyrocketed more than 100% in just three months – might not be sustainable in the long run. This rapid growth could potentially lead to instability.
To determine if traders’ feelings towards SOL have changed following its 10% drop between November 23rd and 27th, the premium of the futures market offers useful information. In normal markets, the price of monthly futures is usually 5% to 10% higher than the current price to compensate for the delay in settlement.
At present, SOL futures show that traders are paying a 23% yearly premium to hold long positions, which is the highest it’s been in seven months. This indicates optimism, but if bullishness becomes too extreme, this figure could exceed 40%. When it does, there’s an increased risk of rapid, widespread sell-offs during sudden price changes or corrections.
Given the ongoing activity on Solana’s blockchain and the trends in its derivatives market, it seems probable that its price will continue to rise. At present, Solana (SOL) has a market cap of approximately $113.7 billion, which is 73% lower than Ethereum‘s $429.4 billion. This substantial difference presents an opportunity for SOL to grow further.
This piece serves as a source of broad knowledge, not as legal or financial guidance. It’s essential to remember that the perspectives, ideas, and opinions expressed within this article belong solely to the author and may not align with those held by CryptoMoon.
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2024-11-28 01:45