Originally published on: December 11, 2024
Solana’s native token, SOL, has seen an impressive 13% rally from the recent low of $203.30 on Dec. 10, now surpassing the $230 mark. This uptrend indicates potential further gains, supported by both derivatives and onchain data. With investors wondering if the correction phase is behind us, the focus is shifting towards what could propel SOL’s price towards $260 and beyond.
Despite hitting a new all-time high of $264.50 on Nov. 22, SOL struggled to maintain momentum afterwards. While the broader altcoin market cap rose by 18% since then, SOL price experienced a 12% decline.
The success of SOL in recent times can be partly attributed to Solana’s SPL tokens, including meme coins. However, this sector has shown a recent slowdown in both trading volume and prices. In the past week, popular projects like Dogwifhat, BONK, and Jupiter witnessed declines ranging from 8% to 12%.
Onchain volumes on the Solana network dropped by 63% in the week ending Dec. 9, raising concerns about the sustainability of the recent price surge. This decline was not unique to Solana, as other networks like Ethereum and BNB Chain also experienced similar drops.
Some traders speculate that ‘maximal extractable value’ (MEV) is a key factor behind SOL’s underperformance relative to the broader market. MEV-driven strategies like ‘sandwiching’ have been pinpointed as causes for price fluctuations and losses among traders during token launches.
In the derivatives market, the recent market crash on Dec. 9 actually benefited SOL by clearing excessive leverage. SOL futures open interest saw a 12% decline, along with a drop in the cost of bullish leverage, indicating a healthier market environment.
Bitwise has set a target price of $750 for SOL, reflecting growing institutional interest and positive regulatory developments. Traders are hopeful about a potential Solana ETF approval in the US, especially after the resignation of SEC Chair Gary Gensler. These factors, combined with a promising outlook for early 2025 and strong derivatives markets, have SOL investors feeling optimistic.
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