Solana’s Impressive Price Surge
On November 10, Solana’s native token, SOL, surprised many by jumping 22%, finally breaching the elusive $54 threshold for the first time since May 2022. This leap during ongoing token sales by FTX’s bankruptcy estate left more than a few eyebrows raised. After all, who doesn’t love a little drama in the crypto world?
FTX’s Token Liquidation and Investor Reactions
The selling spree of SOL tokens from FTX’s assets—about 55.75 million units, mind you—has been part of the bankruptcy saga since September 2023. With a weekly sale limit of $100 million, investors initially had a case of the jitters. However, much like that vegetable you left in the fridge for just one too many days, the fear may have matured into hope as they began to realize the limited impact of the liquidation.
Investor Optimism
Trader Bluntz shared his thoughts on the situation, tweeting, “Once this seller is gone, I can only imagine how hard it’s gonna pump,” encapsulating the bullish sentiment resonating among SOL investors. His enthusiasm paints a picture of a market that is willing to bear the brunt of the sales while simultaneously getting excited about future possibilities.
Leverage Positions and Market Dynamics
The current cryptocurrency environment is a vortex where leverage longs seem to be emerging as heroes. A substantial 39% increase in SOL’s price spurred futures open interest to a hefty $745 million, a level not reached since the glory days of November 2021, when SOL hit an all-time high of $260.
Understanding Funding Rates
Jumping into derivatives markets? Here’s a fun fact: a positive funding rate signifies that buyers are clamoring for leverage. Currently, SOL’s futures funding rate stands at a manageable 0.5% weekly cost for longs, a significant shift from the three weeks prior when those naughty shorts had to pay extra for leverage.
Growth Beyond Derivatives
However, let’s not forget that earned money comes from more than just margin trading. Solana’s ecosystem itself is flourishing. After a dreary six-week decline, Solana’s total value locked (TVL) is making a comeback!
Diversity in Deposits
Though still below pre-FTX levels, the rise in deposits in Solana’s DApps has jumped by 10% in just three days. In the decentralized finance (DeFi) landscape, Solana proudly stands as the fourth-largest blockchain, with a notable 28% uptick in active addresses. Meanwhile, Ethereum seems to be on holiday, witnessing a 22% downturn in user activity.
Sustaining the Momentum: Prospects and Skepticism
While the spikes in network activity and increased TVL buoy SOL token holders, questions linger regarding the sustainability of Solana’s current run above $54. With a market cap of $22.8 billion, it dwarfs Polygon’s $7.8 billion, leading investors to ponder: can this momentum carry on?
Shifting Market Strategies
A key factor to consider is the fee revenue. In the last 30 days, Solana blessed itself with $1.9 million in fees, whereas its competitor Polygon clocked in at $1.6 million. Although still overshadowed by BNB Chain’s $9.1 million, it suggests SOL is making strides in the right direction. For now, the prevailing sentiment seems optimistic, but the fundamentals hint at some potential headwinds in the near future.
