How long can Solana's rally last?

Solana (SOL) has risen more than 10 times since the beginning of the year, with more than 70% growth in December alone. In comparison, Bitcoin has risen 150% this year and Ethereum has risen about 85%. Solana (SOL) has replaced BNB as the fourth largest crypto token by market capitalization.

The Solana blockchain tops the on-chain activity rankings. DefiLlama data shows that Solana DEX trading volume, once second only to Ethereum, has surged by more than 25% in the past week, totaling $5.6 billion. On December 13, Solana ranked only fourth by DEX trading volume. Ethereum remains the most traded DEX asset, with $8.89 billion in trading volume in the past week.

The surge in DEX activity comes after Solana DeFi protocols Pyth and Jito announced token airdrops. At the end of November, oracle network Pyth airdropped tokens worth about $87 million at current prices to its users, and Solana’s second-largest liquid staking protocol Jito also subsequently distributed JTO tokens worth about $228 million.

According to data from The Block, the Solana network also set a new monthly record for new and active addresses. Data as of December 25 showed that the number of active Solana network addresses increased by about 50% from November to more than 15.6 million, an increase from the 15.2 million set in January this year. The number of new addresses in December also set a record of 6.8 million, while the previous record was 6.6 million set in May 2023.

Upward momentum

Solana co-founder Anatoly Yakovenko recently called Solana an Ethereum L2 solution on social media. He wrote: "Solana is an Ethereum L2 implemented through the Wormhole eigenlayer. Once danksharding scales up, no one will stop you from submitting all solana blocks to some data on Ethereum to verify the bridge contract."

Solana claimed this year to be the first blockchain platform to reach 50,000 transactions per second. Some large investment funds, such as Grayscale and CoinShares , have added SOL to their portfolios. CryptoSlate's analysis shows that Solana's TVL has doubled and the value of SOL has soared as on-chain transaction volume fluctuates and user participation rises.

Currently, meme coins such as BONK are hotly traded on Solana, and the airdrops of ecological projects have also attracted a large number of traders to test Solana's loan platform, bridges and other infrastructure.

As the value of the token soars, the Solana network is attracting more partners. Last week, stablecoin issuer Paxos announced its expansion to the Solana network, planning to start issuing its dollar-pegged crypto asset Pax Dollar (USDP) on the Solana blockchain on January 17, 2024.

“Paxos’ decision to bring stablecoin issuance to the Solana blockchain will demonstrate how Solana’s high-performance network and low transaction fees can support regulated financial products and provide leaders like Paxos with new ways to scale and innovate,” said Solana co-founder Raj Gokal.

Solana’s Web3 smartphone, the Saga, has also seen strong interest, with the product recently selling out after going on sale in April.

Can the rally continue?

An anonymous cryptocurrency analyst from InvestAnswers said that Solana is expected to rise more than 3 times again. He expects Solana's dominance to rise to 3% ( SOL dominance is an indicator of SOL's share of the total crypto market value ) and the total crypto market value to rise to $5 trillion.

The analyst noted that Solana's growing dominance, combined with the rising total crypto market cap, could mean that the price of SOL could be well above $300. He said: "SOL's dominance has reached around 2.4%, 2.5%. It's approaching 3%. If so, 3% of 5 trillion is $150 billion, which puts Solana's price at $363."

From another metric, if SOL’s share of Ethereum’s market cap rises to 20%, Solana’s target price would be $366, the analyst said.

Cilinix Crypto analyst shared his thoughts on the recent price action in the Solana (SOL) market. He believes that the fundamentals for the altcoin remain strong, but traders should remain patient.

The analyst believes that Solana is currently fluctuating between support at $110 and resistance around $120. Yesterday, Solana briefly broke through $120 but failed to hold on to gains, a “false breakout” that is not uncommon given the low liquidity and irregular trading activity during the holiday period.

The analyst also pointed out that the healthy trading volume and open interest of Solana futures contracts are signs of continued strength. In the short term, he believes that Solana may break through $120 or bearishly fall below $110. He believes that if Bitcoin fails to stay above $42,000, the SOL price may fall to $95. However, he said that neither scenario would hinder Solana's long-term bullish trajectory: "Fundamentally, Solana remains very bullish and traders are advised to wait patiently for a clear breakout in either direction."

At press time, SOL is trading at around $111.38, down 6% in the past 24 hours.