Solana gains 34.5% in the week, and network metrics support further gains

Solana native token SOL (SOL) hit a 23-month high on March 1, and is currently trading up 34.5% in one week. Solana remains the fourth-largest cryptocurrency without stablecoins, narrowing the gap with third-place competitor BNB (BNB). The big question is what fueled SOL's rally, and crucially, can it continue to outperform its competitors?

SOL price has been trying to consolidate the $100 support for the past two months. So it would not be correct to say that the bull run started before February 23rd. In fact, SOL showed a modest increase of 2% between December 23, 2023 and February 23, 2023, while Ether (ETH) showed 25.5. It's up % over the same period, and Tron (TRX) has posted a 31.5% gain. Basically, whatever happened in the past week that triggered the SOL-supporting confluence.

In addition to the huge gains on SOL, a few Solana SPL memecoins have seen a significant increase in demand over the past week. Bonk (BONK) has seen a 110% gain since February 23rd, while DogWifHat (WIF) experienced a significant rally of 250% during the same period. It is worth noting that this trend is not limited to Solana Network tokens, because Dogecoin (DOGE) and Shiba Inu (SHIB) have recorded a gain of about 51% since February 23. However, some of this interest is likely to have flowed. SOL is influenced by these popular signals when traders seek to profit from decentralized exchange (DEX) listings.

A report published in the New York Times on February 27 alleged that Sam “SBF” Banman-Fried, the former CEO of the FTX exchange, was advising prison guards to invest in Solana. In the year In a trial that ended on November 2, 2023, SBF was found guilty of seven counts of fraud and embezzlement. Although there is no way to know if Sam's comments are related to SOL's profits, the timing of the article raises the possibility.

To assess whether the recent increase in SOL prices has increased demand for the brand, beyond speculation, Solana's network metrics should be examined. At the heart of this ecosystem, SOL is sought after for DX trading, staking solutions, NFT marketplaces and other decentralized applications (DApps) such as gambling, games and social networks.

The Total Value Locked (TVL) in Solana Smart Contracts can affect the price of SOL. Increased TVL user activity and demand for Solana-based DApps, could drive demand and positively impact the price.

Solana's latest data shows a remarkable achievement: its TVL has reached its highest level since November 2022 at SOL 40.7 million, representing a 30% increase year-on-year in 2024. During the same period, and BNB Chain saw a 12% increase in BNB deposits as of December 31, 2023.

Related: Crypto Derivatives Daily Trading Hits All-time High

Further exploration of the impact of this TVL growth on the Solana network shows that some DApps can effectively manage large volumes and large user bases without requiring large deposits.

As reported by Dapradar, Solana's notable increase was mainly focused on the OpenSea NFT marketplace, which contributed to a massive weekly volume of $7.8 billion. Even excluding this, other Solana DApps have seen significant increases. For example, Gito's staking solution saw an impressive 102% increase in one week, while cross-chain liquidity exchange Saber saw a significant 130% increase in the same period.

Solana's success comes in part from the struggles other rival blockchains face with the sudden surge of transactions. For example, the Avalanche network experienced block production on February 23 due to script-related issues. Solana has had its own challenges, such as the five-hour outage on February 6, admitting these problems will reduce the negative impact, shedding light on the challenges of widespread expansion in the industry. Still, network metrics show no evidence that the SOL token has reached any kind of peak.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.