forbes.com
Solana prices rallied Monday, November 18, attaining their loftiest value since late 2021 as bullish sentiment drove gains.
The SOL token, which is the native digital asset of the high-performance Solana blockchain, approached $250.00, according to Coinbase data provided by TradingView.
At this point, the cryptocurrency was trading at its highest in more than three years, additional Coinbase figures reveal.
Alice Liu, head of research for CoinMarketCap, spoke to the strong performance the SOL token has experienced recently.
“Solana was up 9.9% for the past 7 days, and was approaching $250 on the 18th November, marking its highest point in over three years. This rally can be attributed to several factors,” she said via emailed comments.
“First, the market is buzzing with anticipation as Solana nears its all-time high of $260 from November 7, 2021,” stated Liu.
“As the price inches closer to this significant milestone, momentum is building, and traders are eager to see SOL break this record, fueling positive market sentiment. Open Interest for SOL has also been building up to a current high level of $5.61billion, signifying a very active market,” she noted.
“Additionally, the meme coin market has experienced a major boom over the past week, with record trade volumes and the launch of numerous new projects,” Liu added.
“A large portion of this activity has been centered around Solana, driving both its popularity and trading volume. This surge in meme coin activity on the Solana network has further elevated interest and excitement surrounding SOL,” she concluded.
Solana’s Market Position
Greg Magadini, director of derivatives for digital asset data provider Amberdata, commented on how the Solana network has carved out its own unique place in the crypto space.
“Solana is reaping rewards as an alternative smart-contract block chain to Ethereum,” he said via emailed comments.
“While ETH has a market cap +300% the size of Solana, ETH's prospects have structurally declined. ETH investors were promised ‘ultra sound money’ as transaction fees on the blockchain were set to burn partial supply with each transaction,” stated Magadini.
“If ETH the burn exceeded the total proof-of-stake issuance rate, this would lead to a decline in the outstanding supply of ETH, hence a deflationary scheme,” he added.
“Today builders have built their protocols on ETH L2s and "settled" only periodic "state" to L1. This has drastically reduced the transaction fees on ETH (and subsequently the "burn" rate of ETH supply),” the analyst continued.
“As ETH has become inflationary, developers and investors have grown frustrated with ETH and the twitter-verse has begun viewing ETH as a joke to be outcompeted by Solana. Investors speculate that SOL has a lot of upside relative to ETH performance, causing investors to sell ETH for SOL.”
This situation has helped fuel significant interest in the Solana platform and its digital token.
James Davies, CEO of derivatives trading platform Crypto Valley Exchange, spoke to this situation.
“Solana is on a tear right now, along with a lot of the top-tier of alt-coins,” he noted.
“This often happens when Bitcoin has had a rally and capital is looking to continue the run. Bitcoin is the entry rails into crypto, and dozens of assets are now spiking as people move from BTC to a wider diversity of assets.”
Significant Progress
The Solana project has advanced significantly over the last few years, something emphasized by the TikTok influencer who goes by Wendy O.
“Solana has been the underdog of the crypto markets since FTX fell from grace,” she claimed via emailed input.
“It has been truly amazing to watch the team and community thrive. Solana is a direct competitor of Ethereum and has figured out how to perfectly blend crypto culture, community and amazing dApps that make it easy for the masses to join.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.