Solana prices hit a 3-month high as data suggests the SOL rally is above $200.
Solana (SOL) is moving above $180 again after struggling to recapture the level for 3 months. The month-long, 16.3% gain to $183 comes with Bitcoin (BTC) rallying from an all-time high in the $1,000s, but does Solana-based data support a move to higher levels?
Total altcoin capitalization (left) versus SOL/USD (right). Source: Tradingview
Onchain and derivatives metrics indicate that Solana's bull run may be just beginning, with further gains to $200 and above. The data shows a steady increase in Solana Network's Total Value Locked (TVL), with the amount secured in smart contracts reaching a 2-year high.
Solana Network Total Price Locked, SOL Source: Defillama
As of October 26, deposits on the Solana network reached 42.5 million SOL. The top contributors from September 2022 include Jupiter, with a 13% increase in deposits over the past 30 days, Raydium, with an 18% increase and Sanctum with a 17% gain over the same period.
Solana ranks second in decentralized applications.
Solana has now surpassed BNB Chain to become the second largest network in LiquidTVL (LiquidTVL), although it still lags behind Ethereum. The gap has narrowed in recent years. A recent example of Solana's growth is the launch of Binance's SOL liquid staking service, which is currently ranked tenth in the Solana ecosystem, suggesting further growth potential.
In comparison, Ethereum TVL has increased by 2% over the past 30 days, while BNB Chain has decreased by 5%. It's important to note that for many decentralized applications (DApps)—including games, aggregators, Web3 infrastructure, social networks, and marketplaces—looking only at deployment figures can be misleading.
Blockchains are rated by 7-day DEX volumes, USD. Source: Defillama
Solana recently surpassed Ethereum to lead decentralized exchange (DEX) volumes, maintaining this position with a 19% increase in the last seven days. In contrast, Ethereum activity increased by 6%, while BNB Chain decreased by 3%. Overall, Ethereum's Layer-2 ecosystem volumes increased by 5% during the same period, making Solana the clear winner.
Notable contributors to the Solana ecosystem include radium, which accounts for 20%. Lifinity, a 49% increase in volume; and Phoenix, with a 34% increase in activity over seven days. A significant part of Solana's increased flow can be attributed to the memecoin sector, which raises questions about the sustainability of growth.
For example, Moo Deng (MOODENG) rose 178% last week, Goteus Maximus (GOAT) rose 71%, and Nosana (NOS) rose 70%. While it's impossible to predict how long memecoin's rally will last, history shows that only a few can maintain value over the long term. Exceptions include Shiba Inu (SHIB), Pepe (PEPE), and Dogwifhat (WIF).
Related: Bitcoin's Road to $80K Fueled by Bullish Derivatives Trends
Low leverage leaves room for price growth.
In addition to onchain metrics, the lack of excess leverage in SOL futures suggests that the rally to $182 on December 29 is the first stage of an extended bull cycle.
SOL Perpetual Futures Average 8-Hour Funding Rate. Source: laevitas.ch
The current funding rate of 0.01% implies that long positions (buyers) are paying the equivalent of 0.9% per month. When there is high demand from retail buyers, this amount can exceed 2.1% per month; Therefore, the current level is considered neutral. Combined with the positive onchain metrics, this data suggests healthy SOL position buying activity, leaving room for gains around $200 and above.
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.
