Solana worth hits a brand new 2023 excessive — What’s behind the SOL rally

Solana’s native token (SOL) skilled a powerful 22% surge on Nov. 10, breaking previous the $54 mark for the primary time since Might 2022. Notably, this surge occurred amid the continuous selling of SOL tokens by FTX’s bankruptcy property. The Delaware Chapter Courtroom authorized the sale of the failed alternate FTX property, which included 55.75 million SOL in September 2023.

Investor enthusiasm for SOL’s worth improve could also be attributed to the truth that a number of the tokens from the chapter proceedings are both vested or locked. Moreover, there is 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 reworked into hope as traders notice the restricted impression of the gross sales.

FTX has been promoting between 250k-700k $SOL on daily basis for the final 2 weeks whereas worth has both been going up or sideways.

to date its been getting absorbed like a champ and at present charge their unlocked tokens needs to be depleted inside every week.

as soon as this vendor is gone i can… pic.twitter.com/AtnTqz3uxG

— Bluntz (@Bluntz_Capital) November 9, 2023

As dealer and unbiased analyst ‘Bluntz’ aptly described the state of affairs, SOL’s resilience throughout the FTX chapter token dump is spectacular. The publish on X, (previously Twitter) provides a bullish case for SOL, stating,

“As soon as this vendor is gone, I can solely think about how laborious it is gonna pump.”

SOL worth has been fueled by strong demand for leverage longs

SOL’s substantial 39% weekly beneficial properties have pushed its futures open curiosity to $745 million, the best degree since November 2021 when SOL achieved its all-time excessive of $260. Nonetheless, in futures markets, leverage longs and shorts are consistently matched, so it is essential to look at SOL’s funding charge for a extra nuanced perspective.

A optimistic funding charge signifies that longs (patrons) demand extra leverage, whereas the other happens when shorts (sellers) require extra leverage, leading to a destructive 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. But, this can be a important shift from the funding charge ranges noticed three weeks earlier when leverage shorts have been paying for leverage use.

Whereas it may very well be argued that SOL’s rally was primarily pushed by derivatives markets, there’s strong proof indicating development by way of deposits and the utilization of decentralized purposes (DApps) throughout the Solana ecosystem.

Past derivatives, Solana’s ecosystem exhibits strong development

Solana’s whole worth locked (TVL), which measures the quantity deposited in its good contracts, has reversed its declining development after six consecutive weeks.

Solana’s DApps deposits have seen a ten% improve within the final three days. Whereas the present 11.1 million SOL degree continues to be beneath the 30 million SOL previous to the FTX alternate chapter, this current development means that the worst interval for the Solana community could also be behind us.

To verify that this motion is not solely pushed by just a few giant holders inflating TVL, it is important to investigate the variety of customers using lively addresses as a proxy.

Solana now ranks because the fourth-largest blockchain in decentralized finance (DeFi) TVL, accompanied by a 28% development within the variety of lively addresses. Apparently, this surge in exercise occurred whereas rivals skilled declines, with market chief Ethereum going through a 22% drop in DeFi lively customers, in line with DappRadar.

Associated: 3 theses that will drive Ethereum and Bitcoin in the next bull market

On one hand, SOL token bulls profit from the elevated community exercise and better TVL, whereas however, 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 traders to query the sustainability of SOL’s bull run above $54.

Moreover, Solana protocol’s collected 30-day charges amounted to $1.9 million, in comparison with Polygon’s $1.6 million, in line with DefiLlama. Nevertheless, these figures pale compared to BNB Chain’s $9.1 million, elevating doubts in regards to the valuation after SOL’s current rally.

As of now, there isn’t any evident purpose to wager in opposition to the development, as there isn’t any extreme leverage demand noticed in SOL derivatives contracts. However, the basics trace at restricted room for additional upside.