Crypto markets in July have been, per usual, topsy turvy.
Bitcoin jumped 14% to about $69,500 over the past 30 days.
And Ethereum has stayed flat at around $3,400, bucking predictions that the launch of spot Ethereum exchange-traded funds would boost demand.
Solana, however, has skyrocketed, jumping almost 35% over the past month to above $190.
Its performance outstrips all other cryptocurrencies listed in the top 20 by total value, including Ripple’s XRP, Binance’s cryptocurrency, and Tron.
What’s made Solana “moon?” And can it maintain its torrid pace?
‘Institutional interest’
Ajay Dhingra, head of research and analytics at Unizen, a DeFi protocol that aggregates prices from other exchanges, told DL News that Solana’s recent upswing is due to “strong institutional interest.”
He pointed to Hamilton Lane’s launch of a private credit fund on the blockchains as well as VanEck’s filing for a Solana ETF as drivers of the cryptocurrency’s recent growth.
Tristan Frizza, founder of Zeta Markets, a decentralised exchange, also referenced VanEck’s filing.
“The recent launch of Ethereum ETFs might create a ‘buy the rumour, sell the news’ event, potentially driving increased anticipation for Solana ETFs,” he told DL News.
Retail trader buzz
Solana hasn’t just attracted institutional hype, it’s also brought in the masses, per analysts.
Frizza said that part of the token’s outperformance of Ethereum and Bitcoin comes from its centrality to the recent memecoin craze.
That’s something that Athanasios Soutos, the DeFi ecosystem lead at Keyrock, a crypto market maker and OTC desk, also told DL News.
Over the past 24 hours, the total volume of funds that passed through decentralised exchanges on Solana have surpassed equivalent volumes on Ethereum, according to DefiLlama data.
“Although a significant portion of this is driven by speculative memecoins, it demonstrates Solana’s capabilities as a blockchain,” Soutos told DL News.
Bears and bulls
Despite institutional fervour for Solana, Dhingra of Unizen, says that any price action attributable to the hype surrounding ETFs may be short-lived.
Under President Joe Biden, the US Securities and Commodities Commission has cracked down on some of the largest players in crypto.
“It is unlikely that the current SEC administration will approve a Solana ETF, so we may be looking at a reversal soon,” Dhingra said, in reference to Solana’s recent price upswing.
Eugene Cheung, head of institutions at Bybit, also expressed scepticism that an ETF will happen anytime soon.
“The institutions I speak to are assigning a low probability it will come to market in the next 12 months,” he said. “This could change with a shift in regulatory regime or if other large players also file for the Solana ETF.”
However, Soutos of Keyrock, was more bullish.
If Solana continues to attract users and a new technical upgrade goes smoothly, it “has a chance to reach Ethereum’s current market cap of around $400 billion,” he said.
Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.
