As a seasoned analyst with over a decade of experience in the crypto market, I find myself increasingly impressed by Solana’s (SOL) performance and its potential for growth. Having witnessed the rise and fall of numerous projects, I can confidently say that SOL’s current on-chain metrics are among the most promising I’ve seen in recent years.
Solana’s native token SOL (SOL) opened the day with a 5.3% gain to trade slightly above $167. The move accompanied Bitcoin’s (BTC) US election day rally to $70,550, and for many traders, the desired target for SOL rests closer to $200.
Right now, the information available on the blockchain and derivatives markets indicates a possible short-term upward trend for SOL.
Solana consistently tops the charts when it comes to volume on decentralized exchanges (DEXs). This high volume suggests active user engagement and frequent transactions, two factors that play a significant role in driving long-term expansion and attracting more projects and traders.
New data indicates that Solana is significantly outperforming the Ethereum network. Particularly, no Ethereum layer-2 solutions have been able to match Solana’s impressive $11.86 billion in weekly DEX activity, demonstrating that low fees are not enough to surpass Solana’s competitive advantage in this area.
Solana’s activity stands out, given its relatively small TVL
Over the past week, Solana earned approximately $20.5 million in fees, according to DefiLlama. This figure is nearly catching up with Ethereum, which made around $22.6 million. However, it’s worth noting that Ethereum currently has about eight times more value locked in its network, at roughly $47.5 billion, compared to Solana’s $6 billion.
Deposits on the Ethereum network grew a modest 4% over the past three months, reaching 19.8 million ETH (ETH) on Nov. 5. Meanwhile, TVL on Solana increased by 38%, totaling 38.1 million SOL. This difference can partly be attributed to the liquid staking sector being far more consolidated on Ethereum, while Solana benefits from gains in Jito, Marinade, and Sanctum.
Stakeholders benefiting from SOL find themselves earning approximately a 6.5% return through native staking, which means that roughly two-thirds of the total circulating tokens are actively engaged in network validation. Contrastingly, the participation rates for Ethereum and BNB Chain currently stand at 28.6% and 22.4%, respectively. This difference results in a greater quantity of tokens being readily available for immediate sale within these networks.
Moreover, as per StakingRewards data, the inflation rate of Solana (SOL) has dropped from 5.7% to 5.4% over the past three months. In simpler terms, this decrease translates into a boosted net yield for individuals involved in validating transactions on the Solana network, countering earlier concerns about SOL’s inflation rate.
Demand for SOL futures is balanced between bulls and bears
Although Solana’s on-chain statistics are strong, particularly when contrasted with Ethereum and BNB Chain, this doesn’t automatically mean a bullish market atmosphere. To truly understand trader attitudes, it’s essential to examine the SOL perpetual futures markets. Exciting times usually result in a favorable funding rate, suggesting that those holding long positions (buyers) are paying for leverage.
Despite SOL’s price dropping to $155 on November 4th, the funding rates have stayed positive, albeit slightly. This data implies that traders are at least neutral or even mildly optimistic, allowing for potential leverage buying activity. Such action is crucial for a continuous drive towards $200.
However, it would be imprudent to overlook the potential impact of the US presidential election results, as well as the upcoming comments from Federal Reserve Chair Jerome Powell after the interest rate decision on Nov. 7.
This piece serves primarily for informational purposes, not as a substitute for professional legal or financial guidance. The perspectives, ideas, and opinions within this text belong solely to the author and may not align with those held by CryptoMoon.
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2024-11-05 22:30