SOL has surged by over 20% this week, with data suggesting the rally may continue.
Significant Growth of SOL and the Impact of Political Changes
Between November 5 and 7, Solana's (SOL) price increased by 22.5%, reaching its highest level in seven months. This growth was part of a broader altcoin rally, with the market showing a 17% increase following Bitcoin's new all-time high on November 7. SOL's growth was also influenced by the political landscape, with Donald Trump's victory in the U.S. presidential election and a Republican majority in the Senate, which could lead to more favorable crypto regulations.
Open Interest in Solana Futures Reaches All-Time Highs
The rising demand for SOL has been accompanied by a sharp increase in leveraged futures positions. The total open interest in Solana futures reached a historic high on November 7. Despite increased liquidation risk in the event of a SOL price correction, data points to further growth potential.
Solana futures aggregate open interest, SOL. Source: CoinGlass
Open interest reached 21.1 million SOL, an 11% increase from the previous week, with total futures value reaching $4 billion. This growth reflects institutional interest, though it also carries certain risks.
Monitoring Large Futures Positions and Funding Rates
Large futures positions can become targets for investors seeking to profit from short-term volatility. However, on derivatives markets, long and short positions are always balanced, meaning that funding rates show which side is seeking more leverage. Currently, the eight-hour funding rate for SOL stands at 0.017%, or roughly 1.5% monthly. This level indicates a neutral to bullish sentiment, supporting the potential for further growth.
Strong On-Chain Metrics Support Continued SOL Price Growth
Analysts suggest that SOL's recent price growth may be partially influenced by the popularity of memecoins. Platforms like Pump.fun and the decentralized exchange Raydium (DEX) have contributed to the memecoin craze within Solana’s ecosystem. However, Solana’s broader ecosystem developments could enable it to reach $200.
Criticism of Memecoin Influence and Rising TVL
Some critics, like “CatfishFishy,” warn about potential “pump and dump” schemes organized by “insiders” – wealthy investors who may manipulate the market. Additionally, a portion of TikTok's audience is underage, raising regulatory concerns. Speculation that SOL’s growth is solely driven by memecoins overlooks key factors, such as Solana’s total value locked (TVL), which reached $6.64 billion on November 7 – a 22% increase from the previous month.
Solana Continues to Grow Thanks to Strong On-Chain Metrics
As long as on-chain metrics remain strong and SOL derivatives show no signs of excessive greed or fear, Solana’s network competitiveness through fast and affordable transactions will continue to provide it with a market advantage. This competitive edge draws in users, boosting Solana’s market share. Overall, there are no signs of weakening, indicating a clear path for further SOL price increases.
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