Solana prices have been on a tear lately, rallying over 30% in under seven days as the broader cryptocurrency market pushes higher.
The SOL token, which serves as the native digital asset of the high-performance Solana blockchain network, climbed to $188.37 late last night, CoinMarketCap figures show.
At this point, the cryptocurrency had risen roughly 33% after approaching $140.00 on May 14 and was trading at its highest value since early April, additional CoinMarketCap data reveals.
Since then, the SOL token has pulled back somewhat, but has still managed to retain most of the gains it generated over the last week, and was trading close to $178.00 at the time of this writing.
Over the last week, the value of the overall cryptocurrency market has risen from roughly $2.25 trillion to approximately $2.6 trillion at the time of report, an increase of more than 15%.
Robust Network Activity
When explaining the latest gains in SOL, analysts polled for this article repeatedly pointed to strong activity on the Solana network.
“There is a lot going on in the Solana ecosystem that could have contributed to the recent gains,” said Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management.
“Besides the general optimism for crypto and risk-on assets recently, Solana has also experienced a DeFi and meme-coin frenzy that has captivated the attention of traders and gamblers,” he stated via emailed comments.
“Very similar to the immense NFT growth that Solana fueled a few years ago, it seems that speculators have turned their attention to these meme-coins in an effort to get-rich-quick,” said Sifling.
“Since you need to buy Solana’s token SOL in order to buy these meme-coins, it seems that the token has benefited from the continued demand,” he claimed.
Joe Lee, founder and CEO of DefiDive, also weighed in, focusing on network liquidity and its subsequent impact on the value of SOL.
“Earlier this year Solana’s price peaked at $202.37 on March 19th, driven by a significant influx of liquidity from traders seeking yield in the memecoin markets,” he noted.
“DefiDive’s DeFi market data showed liquidity moving from Solana’s network to Base’s chain due to a significant drop in transaction fees following Ethereum’s Dencun upgrade,” Lee observed.
“Simply put, the upgrade, which rolled out on March 13th, made the Base network the lowest-cost place to transact,” he noted.
“Consequently, a large volume of memecoin trading shifted directly to the Base network triggering a selloff of Solana. This was observed and tracked using TVL (Total Value Locked) data.”
However, Lee emphasized that market participants have been flocking back to the Solana platform more recently.
“Confidence in Solana has returned over the past two weeks following a period of uncertainty about whether Base would replace Solana in liquidity,” he stated.
“According to our data, Solana currently maintains $6.725 billion in TVL compared to Base’s $1.757 billion. Solana is currently gaining liquidity much faster than its competing layer 1 and layer 2 chains.”
Lee followed up by emphasizing a key staking announcement that trading platform Robinhood made earlier this month.
“In other macroeconomic indicators, Solana made headlines this week as Robinhood launched its first crypto staking product for European customers, featuring none other than the SOL token,” he stated.
Bullish Price Outlook
Going forward, Lee offered a bullish prediction for SOL prices.
“With strong underlying economics, our analysts have set a target for Solana’s price to reach $210 within the next 30 days,” he stated.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, also offered an optimistic take on the digital currency’s future prospects.
Describing SOL as “a favorite of many crypto investors,” he emphasized that the platform is user friendly and provides very fast transaction processing.
“This results in While Bitcoin is about 6% off its all-time high, Solana is still about 30% off its all-time high of almost $260,” said DiPasquale.
“We believe it could climb further, but will find resistance at around the $200 line, which it wasn’t able to convincingly cross earlier this year.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
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