Solana’s native token, SOL (SOL), skilled a formidable 22% surge on Nov. 10, breaking previous the $54 mark for the first time since May 2022. Notably, this surge occurred amid the steady selling of SOL tokens by FTX’s bankruptcy estate. The Delaware Bankruptcy Court authorized the sale of the failed alternate’s property, which included 55.75 million SOL, in September 2023.
Investor enthusiasm for SOL’s price enhance could also be attributed to the incontrovertible fact that a few of the tokens from the chapter proceedings are both vested or locked. Furthermore, there’s a weekly sale limit of $100 million imposed as a part of the FTX liquidation plan. In essence, the preliminary concern of asset liquidation has remodeled into hope as buyers notice the restricted influence of the gross sales.
FTX has been promoting between 250k-700k $SOL each day for the final 2 weeks whereas price has both been going up or sideways.
thus far its been getting absorbed like a champ and at present charge their unlocked tokens needs to be depleted inside a week.
as soon as this vendor is gone i can… pic.twitter.com/AtnTqz3uxG
— Bluntz (@Bluntz_Capital) November 9, 2023
As dealer and impartial analyst Bluntz aptly described the scenario, SOL’s resilience throughout the FTX chapter token dump is spectacular. The put up on X (previously Twitter) provides a bullish case for SOL, stating:
“Once this vendor is gone, I can solely think about how laborious it’s gonna pump.”
SOL price has been fueled by stable demand for leverage longs
SOL’s substantial 39% weekly positive aspects have pushed its futures open curiosity to $745 million, the highest stage since November 2021, when SOL achieved its all-time high of $260. Still, in futures markets, leverage longs and shorts are always matched, so it’s essential to look at SOL’s funding charge for a extra nuanced perspective.
A optimistic funding charge signifies that longs (consumers) demand extra leverage, whereas the reverse happens when shorts (sellers) require extra leverage, leading to a adverse funding charge.
SOL’s present futures funding charge represents a 0.5% weekly price for leverage longs, which isn’t extreme given the prevailing bullish momentum. Yet, that is a important shift from the funding charge ranges noticed three weeks earlier when leverage shorts have been paying for leverage use.
While it might be argued that derivatives markets primarily drove SOL’s rally, there’s stable proof indicating development by way of deposits and the utilization of decentralized functions (DApps) inside the Solana ecosystem.
Beyond derivatives, Solana’s ecosystem reveals stable development
Solana’s complete worth locked (TVL), which measures the quantity deposited in its sensible contracts, has reversed its declining development after six consecutive weeks.
Solana’s DApps deposits have seen a 10% enhance in the final three days. While the present 11.1 million SOL stage continues to be under the 30 million SOL previous to the FTX alternate chapter, this latest development means that the worst interval for the Solana community could also be behind us.
it’sTo affirm that this motion is not solely pushed by a few giant holders inflating TVL, it is important to investigate the variety of customers using energetic addresses as a proxy.
Solana now ranks as the fourth-largest blockchain in decentralized finance (DeFi) TVL, accompanied by a 28% development in the variety of energetic addresses. Interestingly, this surge in exercise occurred whereas opponents skilled declines, with market chief Ethereum going through a 22% drop in DeFi energetic customers, based on DappRadar.
Related: 3 theses that will drive Ethereum and Bitcoin in the next bull market
On the one hand, SOL token bulls profit from the elevated community exercise and better TVL. On the different hand, Solana’s present market capitalization of $22.8 billion has surpassed Polygon’s $7.8 billion by practically threefold, regardless of each networks having comparable DeFi TVL. This has prompted buyers to query the sustainability of SOL’s bull run above $54.
Additionally, Solana protocol’s accrued 30-day charges amounted to $1.9 million, in comparison with Polygon’s $1.6 million, based on DefiLlama. However, these figures pale in comparison with BNB Chain’s $9.1 million, elevating doubts about the valuation after SOL’s latest rally.
As of now, there isn’t a evident cause to wager in opposition to the development, as there isn’t a extreme leverage demand noticed in SOL derivatives contracts. Nevertheless, the fundamentals trace at restricted room for additional upside.
This article is for common data functions and isn’t supposed to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the creator’s alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.
