SOL Posts 45% Growth, Outperforming Ethereum and Avalanche Despite Increasing Concerns
Summary:
Over the past week, Solana's native token, SOL, experienced a 45% gain, hitting a peak of $210 on March 18. Despite not surpassing its November 2021 record of $260, SOL's value has risen 58% over the past month, outperforming Ether (ETH) and Avalanche (AVAX). Notably, SOL's price was momentarily under $165, highlighting significant support. Alongside this, there was a surge in Solana's DApps activity, despite setbacks in memecoin SPL. This activity growth suggests that SOL's support level of $165 is likely to persist. However, concerns remain over the significant issuance of tokens and the possible sell-off risk related to the bankrupt FTX exchange's holdings.
In the last week, Solana's intrinsic token, SOL (SOL), shot up by a staggering 45%, with its value reaching $210 on March 18. Despite not achieving the all-time high of $260 from November 2021, SOL has significantly surged by 58% in the past 30 days. This impressive growth outshines the progress of Ether (ETH) and Avalanche (AVAX), both of which grew by 12% and 30% correspondingly during this time. Maintaining its standing as the fifth-biggest cryptomoney by market cap and ranking third in total value locked (TVL), the long-term bearish prediction on SOL’s price seems untenable. Still, investors cannot guarantee if SOL's price will remain above $165 in the near future, so they must scrutinise on-chain metrics for indications of the bullish trend's longevity.
Solan's recent burst of activity cannot be overlooked. Some critics argue that the 18% dip in SOL's value since March 18 might signal a reversal of the bullish trend. However, SOL's price dipped below $165 for less than 60 minutes on March 20, indicative of robust support. An impending altcoin season might be on cards given Bitcoin (BTC) inability to maintain its stretch over $70,000. Both positive and negative viewpoints hold weight.
Critics note that Solana's increasing demand led to relatively higher charges and more unsuccessful transactions. Data released by Cointelegraph on March 16 revealed that the lag experienced by validators reached up to 40 seconds, resulting in almost half of the transactions failing within a 20-minute period. This activity surge resulted from a frenetic interest in memecoin, notably driven by the introduction of 'Book of Meme' (BOME), which generated a spectacular $270 million in trading volume within its initial 24 hours.
The competition for memecoin launches escalated following the March 13 hard fork in Ethereum's DenCun, which reduced rates for its layer-2 scalability solutions. It triggered a boom in Ethereum's Base activity, with decentralised applications (DApps) volume shooting up by 77% within a week, according to DappRadar. As a result, Ethereum's ecosystem presented a tougher competitive landscape for memecoin launches, potentially shifting the attention and financial power of Solana users.
Interestingly, Solana's SPL memecoins appeared to attain their peak the day after the upgrade of the Ethereum network on March 14. Dogwifhat (WIF) and Bonk (BONK) reported a drop of 38% and 40% respectively. Regardless, the raised level of activity ended up benefiting the Solana network with increased volume and active addresses interacting with its DApps.
In the seven days since March 13, the volume of the Solana network has boosted by 55%. This is considerably higher than its competitors like BNB Chain and Polygon, which reported growth of only 2% and 7% respectively over the same period. However, the amplified activity and volume resulting from memecoins and new token debuts do not necessarily promise continuous price augmentation, irrespective of the project's merits.
The dipping fortunes of the liquid staking project Jito (JTO), which suffered a 20% drop in two days after hitting a top of $3.85 on March 18, supports this. Similarly, the Jupiter (JUP) token of the decentralised exchange underwent a 25.5% decline from its all-time high of $1.60 on the same day. A decrease in SOL's value adversely affects the whole Solana ecosystem, regardless of the level of adoption these projects may boast.
Analysts indicate that significant issuance of tokens to cover Solana's considerable validator costs, which effectively increase the supply of SOL, is a significant concern. There's also a potential risk of a sell-off in the near future due to a large amount of tokens held by the bankrupt FTX exchange's estate. Even so, the growth in Solana's DApps activity shows no clear signs of weakness, suggesting that the $165 support level should remain secure, at least in the near term.
This article is not intended as financial advice or recommendation. Investments and trading moves involve risk, and readers should undertake their own research before making a decision.
Published At
3/21/2024 8:18:51 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.