Despite Market Downturn, Solana's SOL Paves Way Toward Potential $200 Target
Summary:
Despite a 4% downturn in the cryptocurrency market, Solana's (SOL) token witnessed a 2% upsurge on March 14. Regulatory developments and U.S. inflation data have temporarily paused SOL's momentum. A maiden feature of Ethereum’s Dencun upgrade—reduced gas fees—may have also impacted SOL. With Solana’s decentralized applications (DApps) gaining momentum, investors are speculating a potential rise toward a $200 target price. This report should be used for informational purposes only and does not constitute legal or investment advice.
Despite seeing a market slump of 4%, Solana's primary coin, SOL, experienced a 2% boost on March 14, failing to hold its stance at $173. At the moment, with a price of $164, SOL has recorded a notable 36% climb since March 5. This causes speculation among investors if conditions are ripe for a potential rise to $200.
Crypto regulatory measures, along with U.S. inflation data, have briefly halted SOL's growth. The regulatory notice came from Hong Kong's Securities & Futures Commission (SFC) on March 14, asserting the Bybit exchange unauthorized in providing lending and derivatives items locally. With approximately $15.1 billion in open interest, Bybit holds significant sway as the second-largest derivatives exchange, as revealed by CoinGlass.
Investors have also been swayed by the recently published U.S. Labor Department’s Producer Price Index (PPI) report, indicating price shifts for domestically produced goods and services. A 0.6% increment was noted from January to February, decreasing the possibility of a forthcoming interest rate cut by the U.S. Federal Reserve scheduled for March 20.
The implementation of lower gas fees by Ethereum’s Dencun update, effective from March 13, might have also played a role in depressing SOL's progress. Industry experts noted that transactions on Ethereum's layer-2 decentralized exchange, Base, are significantly lesser than those on Solana.
As an example, on March 14, the Solana DEX transaction fee reportedly amounted to $0.37, compared to the $0.02 fee on Base’s DEX. Still, despite enhancements to Ethereum's framework, the buzz surrounding Solana's memecoins and airdrops, (e.g., Dogwifhat (WIF), BONK, and Jupiter (JUP)), remains high.
In a significant move for Solana’s SPL coins, Coinbase, a leading U.S. exchange, added a page titled “How to Buy Jeo Boden (BODEN)” directing visitors to CoinMarketCap for listings. This uncanny reference was spotlighted by Joe Weisenthal on March 13, and reportedly resulted in garnering over 621,300 views on X social network post.
The anticipation surrounding incoming airdrops, along with this development, contributed to a remarkable spike in the usage of Solana's decentralized applications (DApps). Data from the past week indicates a 13% boost in Solana’s total value locked (TVL) and a 24% surge in DApp volumes. Conversely, Ethereum trailed slightly in TVL but registered an 11% increment in DApp volumes. However, when absolute TVL numbers are considered, Solana ranks behind BNB Chain and Arbitrum boasting deposits of $3.5 billion and $2.6 billion, respectively.
With SOL reaching its two-year peak, it is crucial to check the requirement for leverage positions in futures markets to assess if traders still hold a positive outlook. This assessment includes examining the funding rate of the perpetual contract (inverse swap) that aims for an equilibrium in any potential leverage demand disparity.
A positive funding rate indicates an increased long position leverage demand. Rates over 0.10% per 8-hour period equaling 2.1% per week are normally considered high and unmanageable. Currently, the funding rate for SOL stands at 0.05%, which is fairly expensive for those maintaining long positions with leverage, but quite common in a bullish market.
Even faced with apprehension over its centralization or stability against Ethereum, Solana network's activity continues to burgeon. SPL tokens have undoubtedly caused ripples, with several listings on prominent centralized exchanges. This has stimulated investors to acquire SOL tokens to take part in many ongoing airdrop programs, making a $200 target price seem attainable.
This report is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Published At
3/14/2024 11:12:53 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.