• Solana (SOL) price hits 3-month high above $180, hinting at a potential rally above $200
• On-chain data shows a steady rise in Solana’s total value locked (TVL), reaching a 2-year high
• Solana has surpassed BNB Chain to become the second-largest network in terms of liquid TVL, trailing only Ethereum
Solana’s price has hit $180 as Bitcoin storms toward a new all-time high. Data suggests SOL can go higher.
Recent Price Action
Solana (SOL) trades above $180 again after struggling to recapture the level for nearly 3 months. The month-long 16.3% gain to $183 comes alongside Bitcoin (BTC) rallying within $1,000 of its all-time high, but does Solana-specific data support a move to higher levels?
Growing Total Value Locked
Onchain and derivatives metrics indicate that Solana’s bull run may be just beginning, with the potential for further gains toward $200 and higher. Data shows a steady rise in the Solana network’s total value locked (TVL), as the amount secured in its smart contracts hit a 2-year high.
On Oct 26, deposits on the Solana network reached 425 million SOL, the highest since September 2022. Key contributors include Jupiter, which saw a 13% increase in deposits over the last 30 days, Raydium with an 18% increase, and Sanctum with a 17% inflow during the same period.
High Decentralized Application Usage
Solana has now surpassed BNB Chain to become the second-largest network in terms of liquid TVL, although it still trails behind Ethereum. The gap has been narrowing in recent years. A recent example of Solana’s growth is the launch of Binance’s SOL liquid staking service, which currently ranks tenth in the Solana ecosystem, suggesting more potential for growth.
In comparison, Ethereum’s TVL increased by 2% over the past 30 days while BNB Chain declined by 5%. It’s important to note that looking solely at deposit figures can be misleading, as many decentralized applications (DApps) including games, collectibles, Web3 infrastructure, social networks, and marketplaces do not require large deposit bases.
Solana has recently surpassed Ethereum to lead in decentralized exchange (DEX) volumes, maintaining this position with a 19% increase over the past seven days. In contrast, Ethereum’s activity surged by 6% while BNB Chain declined by 3%. Overall, Ethereum’s layer-2 ecosystem volumes rose by 5% during the same period, making Solana the clear winner.
Sustainable Growth Factors
Notable contributors within the Solana ecosystem include Raydium, which gained 20%, Lifinity with a 49% increase in volumes, and Phoenix adding 34% activity in just seven days. A significant portion of Solana’s increased flows can be attributed to the memecoin sector, raising questions about the sustainability of this growth.
While it’s impossible to predict how long the memecoin rally will last, history shows that only a few can maintain value over the long term. Notable exceptions include Shiba Inu (SHIB), Pepe (PEPE), and Dogwifhat (WIF).
Low Leverage Use
In addition to onchain metrics, the lack of excessive leverage in SOL futures suggests that the rally to $182 on Dec 29 is merely the initial phase of a broader bull cycle.
The current funding rate of 0.001% indicates that long positions (buyers) are paying for leverage, equating to approximately 0.9% per month. In times of high demand from retail buyers, this rate can exceed 2.1% per month, thus the current level is considered neutral. When combined with the positive onchain metrics, this data points to healthy SOL spot buying activity, leaving room for potential gains toward $200 and higher.
Conclusion
The recent price surge, growing usage metrics, and low leverage levels all point to the possibility of Solana retesting its all-time highs in the near future. While some factors like memecoin growth may be temporary boosts, the broader ecosystem metrics indicate genuine adoption and development that could support further upside for SOL.
