Solana Crypto Surges: Spurred by Restaking, Bitcoin-Solana Bridge and Federal Reserve Updates
Summary:
The value of Solana (SOL) crypto has surged by more than 10%, driven by positive updates in the market, including the probable launch of a restaking solution by Jito Labs. In addition, the projected Q3 release of Zeus Network's "Zeus Program Library" system, which creates a bridge between Bitcoin and Solana, has spurred interest. Meanwhile, Solana's recovery is part of the broader crypto market lift seen after the US Federal Reserve indicated it's unlikely to hike interest rates further in 2024. The upshot of all these developments is greater demand for SOL, pushing its projected recovery move towards $150 in May.
The price of Solana (SOL) has surged today, increasing by more than 10% over the past 24 hours, and hitting the value of $136.60 on May 2. Compared to its lowest price a week ago at $118.90, it's up by 15%. Monitoring data, provided by TradingView, shows that SOL resurrected following a significant drop chiefly instigated by anxieties surrounding Federal Reserve's potentially minimized interest rate cuts. This policy has consequently weakened traders' and investors' enthusiasm towards high risk assets, including cryptocurrencies.
Nonetheless, the Solana market has seen renewed interest due to some encouraging changes in the past 24 hours. Jito Labs, a company known for its expertise in the Solana infrastructure, is reportedly in the process of creating a restaking solution. This is similar to the service provided by EigenLayer within the Ethereum ecosystem. "Restaking" generally signifies the process wherein validators can stake their existing Proof of Stake (PoS) assets to provide additional safety measures and services across multiple layers, with no need for additional tokens.
Subsequent to this disclosure, the total-value-locked (TVL) within Jito's liquid staking smart contracts escalated from 9.92 million SOL on May 1 to around 10.5 million SOL on May 2. In the same timeframe, Solana's TVL rose from 26.45 million to 27.21 million SOL.
The growimg DeFi metrics indicate a rising demand for SOL, spurred mainly by the speculated Jito restaking service, thus contributing to the rise in the cryptocurrency's price. Adding to SOL's gains today is the strategic revelation of a fresh cross-chain bridge service that connects Bitcoin and Solana, projected for potential release in Q3.
The "Zeus Program Library" (ZPL) system, developed by Zeus Network, collaborates with the Apollo bridge protocol to convert users' Bitcoin into zBTC tokens, which are wrapped by ZPL. Subsequently, these tokens can be utilized within the Solana ecosystem for diverse purposes, such as trading on decentralized exchanges, participation in NFT marketplaces, as well as borrowing, lending, gaming, and SocialFi platforms.
The possibility of a substantial surge in transaction volume on Solana post the integration of Bitcoin, one of the most extensive and popularly used cryptocurrencies, raises the potential for a significant increase in SOL's demand, which in turn explains the positive reaction of traders following Zeus Network's announcement.
Moreover, SOL's gains today are a part of a broader recovery within the crypto market post the Fed's announcement that interest rate hikes in 2024 seem unlikely. Central bank officials of the United States chose to maintain rates within the limitation of 5.25% to 5.5% following the ending of the Federal Open Market Committee's meeting on May 1.
This decision was influenced by a decrease in the U.S. gross domestic product (GDP) coupled with ongoing inflation. Fed Chair, Jerome Powell, expressed the improbability of the Fed elevating interest rates further, emphasizing that a stronger evidence is necessary to confirm that the current policy isn’t adequate to subdue inflation towards a target of 2%.
The benchmark U.S. 10-year Treasury note's yield declined by 0.1% post Powell's statement, encouraging investors' risk appetite in the short run. As traditional and safer investments provided lower returns due to the reduction in yields, investors sought higher returns elsewhere, benefiting volatile but high return assets like Solana.
SOL's upshot today is partly the result of its bounce back from a consistent resistance-turned support area. The strong accumulation sentiment among investors is evident as the cryptocurrency has consistently shown signs of recovery from March each time it neared the area. The backing of the 200-day exponential moving average (200-day EMA; the blue wave) has further bolstered the buying sentiment. Consequently, SOL foresees a prolonged recovery move towards $150 in May. This target is in alignment with a resistance amalgamation that includes the 50-day EMA (red wave) and the prevailing sideways channel of the cryptocurrency's upper trendline (purple area).
Published At
5/2/2024 4:35:53 PM
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