Despite the crypto market was actually flat Tuesday, the novel token Solana become a hot-token, hitting a new all-time high due to growing investor fervor around altcoins, which also supports the smart contracts necessary for booming decentralized finance (DeFi) applications and non-fungible tokens (NFTs).
Solana (SOL) token surged to become the 7th most valuable cryptocurrency this week, overtaking Dogecoin, Polkadot, and Uniswap on Tuesday and reaching a record high of $125.98 before later slipping back to 8th position.
According to Coinbase, Solana is up almost 26% over the 24 hours. In the past week, it’s up over 58%, and in the past month, it’s up 275%. As for the past year, Solana has surged over 2,348%.
After seeing some strong demand from retail and institutional investors, SOL has a market cap of more than $28 billion. Amid all of this, SOL-related mentions across social media networks have skyrocketed too. This means that in a short time, SOL has seen strong interest from institutions.
Jonas Luethy, a trader at London-based cryptocurrency broker GlobalBlock, wrote Monday, “Popular altcoin Solana has reaffirmed its status as an outlier in the market.” He also noted Solana was by far the best-performing top-ten cryptocurrency over the past week.
The token made its debut only 18 months ago but now has a market value of over $30 billion.
So, what are the reasons for such a steep rising of Solana? The main reason Solana has attracted so much attention recently is that the network entered into non-fungible tokens (NFTs), which can be anything digital, such as art or music that are sold in digital.
Solana launched Degenerate Ape Academy, which sold a collection of pictures of cartoon apes amid the August rally of NFTs, which hit a record in sales of about $900 million. 10,000 of them sold in the first 10 minutes, which then drove the SOL token higher as people needed the cryptocurrency to buy the cartoon apes.
Solana has also focused on DeFi projects, which cut out financial institutions and intermediaries, executing peer-to-peer financial transactions over the blockchain in recent months.
As well, Solana uses the proof-of-history (PoH) consensus, which means that messages are grouped so that there is proof and a record of the time of each message. The concept allows for greater scalability and trust in the blockchain.
With the cheaper network and claims to offer a faster transaction speed, up to 50,000 transactions per second, Solana soon might be seen as a rival to Ethereum.
Investors have increasingly been selling off Bitcoin funds in favor of investments tied to other cryptocurrencies, according to a Monday report by crypto investment firm CoinShares. For the first time, Solana funds led investment growth earlier this month, tacking on more than $7 million in the week ending August 20, compared to $3.2 million for Ethereum and a loss of $2.8 million for Bitcoin. Investment strategist James Butterfill noted Solano’s more flexible software and faster transaction speed, compared to larger rival Ethereum, has helped it gain traction among investors and software developers.
Solana’s stunning rally this past week has headlined growth among a slew of so-called altcoins, cryptocurrency alternatives to Bitcoin and Ether. Solana’s support for smart contracts has helped it take advantage of the buzz around NFTs and DeFi. However, other players have revealed plans to dive into this sector as well, such as Cardano, for instance, planning to launch next month a software upgrade for smart contracts processing.