SOL token of smart contract platform Solana continued its unflagging surge higher in the market on Thursday, as it topped XRP as the 6th most valuable cryptoasset.
The altcoin market has seemingly brushed off Monday’s heavy sell-off and continues to forge higher with a range of in-vogue coins printing double-digit percentage gains and some fresh all-time highs. While Bitcoin and Ethereum are slowly regaining recent losses, Solana continues to soar into unchartered territory and now trades above $200 after opening the year at under $2.
By Thursday morning, SOL was up by a whopping 31% over the 24 hours, trading at $210. The price was further up by almost 90% in a week and over 440% for the past 30 days, by far outperforming smart contract competitors Cardano (ADA) and Ether, which rose by 74% and 10%, respectively, over the same period.
Following the flipping of XRP, the next coin on the market capitalization rankings, Binance Coin (BNB) (with a market capitalization of $63 billion), now seems within reach for Solana ($61 billion) in the short-term. BNB has itself seen huge growth (1,718% in a year), as smart contracts and DeFi services have embraced the Binance Smart Chain.
And while SOL’s price has grown, total value locked (TVL) in dollar terms on the platform has also risen exponentially through August and September, moving from $1.22 billion on August 1 to $7.99 billion as of today, data from tracking site DeFi Llama shows.
Solana’s price rise has been astounding. Someone who has participated in the Solana initial coin offering was able to buy SOL for $0.22. The price per SOL is now above $208 — a 95,000% increase. Other promising Ethereum competitors, including Cardano, Polkadot, Dfinity, Terra, Polygon, and Avalanche, have also increased in price tremendously over the past year, but Solana’s rise is something special.
One reason for the growth is the fact that Solana has the backing of the popular cryptocurrency exchange FTX, which has launched several Solana-based projects. Alameda Research, the same firm that backs FTX, is one of the biggest investors in Solana, alongside Andreessen Horowitz and Polychain.
Another obvious reason are the transaction fees, which are lower than those of most competitors.
Also, there’s the TVL (total value locked), a metric that counts how much value has been locked into projects on the Solana ecosystem. According to Defi Llama, a website that tracks decentralized finance projects, Solana is currently the third-largest chain in terms of TVL.
In detail, Solana hosted the launch of the NFT Degenerate Ape Academy on Aug. 15, which featured a collection of 10,000 cartoon apes. They were sold out in just eight minutes and involved 96,000 SOL or about $5.9 million.
Solana continued its foray into the NFT space by enabling an FTX-backed digital collectibles marketplace earlier this week. FTX, a crypto derivatives platform, revealed that its new NFT venture would enable NFT creators and owners to trade their digital arts cross-chain using Solana and Ethereum.
The sharp rise of Solana has caught the attention of many of the crypto community’s leading figures, with speculations arising that Ethereum – although still much larger by market capitalization ($411 billion) – may not be able to maintain its dominant position indefinitely. Among the most commonly cited reasons for this is Ethereum’s high fees, which continue to plague the network.
Some crypto community members appeared to be surprised by just how strong the growth has been in recent days, especially in light of Tuesday’s sharp selloff in the crypto market:
“Quite a run it had and still has! I was also surprised at how well it held up against the flash crash yesterday,” wrote a Reddit user, while another added “Flash crash? Hell no says Solana.”
Meanwhile, Google search data, a proxy sometimes used to gauge interest in various cryptoassets, showed that search traffic for Solana has caught up with, and on occasions even overtaken, searches for the much larger smart contract platform Ethereum.
The price growth for SOL in September comes after Solana in late August announced its new hackathon series dubbed “Ignition,” with $5 million in prizes for developers across the DeFi, Web3, Gaming, and Art/Collectibles niches.
Greg Waisman, co-founder and CEO of payment network Mercuryo, envisioned exponential growth for the Solana ecosystem based on its growing adoption among the decentralized finance (DeFi) and NFT space. He believes Solana’s boom is similar to Ethereum and Binance Smart Chain, adding that it would boost SOL/USD exchange rate to as high as $500 in the second half of 2021.
“Solana is potentially a $500 digital coin, and the price growth of Solana in recent times points to the capacity of the token to receive enough boost to hit this mark before the end of H2 2021,” Waisman said.
On the flip side, analysts at JPMorgan Chase warned clients about overvaluation risks in the altcoin and NFT space, stating that the recent rally is “more likely to be a reflection of froth and retail investor ‘mania’ rather than a reflection of a structural uptrend.”