Solana (SOL) Hits New Yearly High, Surpasses XRP to Enter Top 5 Market Cap
SOL is currently trading at its highest level in 20 months, driven by the vibrancy of the DeFi ecosystem and the resurgence of the memecoin craze.
Solana (SOL) Hits New Yearly High, Surpasses XRP to Enter Top 5 Market Cap. Photo: CNBC
Solana (SOL) has officially surpassed XRP, becoming the 5th largest cryptocurrency by market capitalization. The coin reached a peak market cap of $33.7 billion, the highest in the past 20 months, according to CoinMarketCap.
Market Cap and Trading Volume of Solana (SOL) in the past 24 hours. Source: CoinMarketCap
The allure of the DeFi ecosystem and the current memecoin trend are propelling Solana forward. This week, the total value locked (TVL) on Solana surpassed $2 billion for the first time since FTX's collapse in November last year.
TVL fluctuations in the Solana ecosystem from April 2022 to date. Source: Defi Llama
Decentralized exchanges within this ecosystem are also gaining popularity among DeFi users, with trading volumes consistently rising. On December 15th alone, the DEX Orca processed over $750 million in trading volume, compared to around $100 million the previous month.
The growth wave was kickstarted by Bonk, a memecoin that currently dominates with a market capitalization of $1.2 billion. As reported by Coin68, Bonk attracted users by airdropping tokens to owners of Solana's Saga phones. Consequently, Saga phones became scarce commodities, fetching prices as high as $5,000 per unit.
Taking advantage of the airdrop frenzy that's captivating the crypto community, several other projects are also following suit by distributing free tokens similar to Bonk, such as Access Protocol - which recently announced a hot reward of 100,000 ACS tokens for each Saga holder.
The heat is further fueled by the memecoin speculation trend across various ecosystems, not just Solana. Users are hunting for memecoins that can turn hundreds of dollars into thousands overnight. Typically, they accumulate a quantity of SOL before converting it into their favorite memecoin. Whenever the memecoin surges in price, they sell and convert back to SOL. This phenomenon is also occurring prominently across other ecosystems, notably Avalanche (AVAX) and Injective (INJ) - both networks attracting significant capital and experiencing rapid increases in platform token prices recently.
Price correlation movements between Solana (SOL), Avalanche (AVAX), and Injective (INJ). Source: Tradingview
However, SOL seems to be receiving more favor. The blockchain appears to have stabilized and recovered from a series of chain halts last year. The ecosystem has also completely isolated itself from the past troubles of FTX, the company that once held up to $1 billion worth of SOL before filing for bankruptcy.
At the time of reporting, SOL had just set a new peak a few minutes ago at $84.69, marking a 10% increase over the past 24 hours with no signs of immediate correction. Trading volume within the same reference frame also surged significantly by 100% to $3.9 billion.
1D chart of SOL/USDT trading pair on Binance. Photo taken at 09:35 AM on December 21st, 2023.
