Solana Surpasses $230, Clearing Path to New All-Time Highs for SOL Price
Traders’ anticipation of a SOL ETF approval and Bitwise’s $750 price target are fueling optimism for Solana.
Solana Surpasses $230, Clearing Path to New All-Time Highs for SOL Price
ALTCOIN AND DETAILS
Solana's native token, SOL
SUN
tickers down
202,18 €
, has surged 13% from the local low of $203.30 on Dec. 10, reclaiming the $230 level. This recent price action has opened the door for further gains, as indicated by both derivatives and on-chain metrics. Market participants are now wondering if the correction is over and what could be the catalysts that propel the price towards $260 and beyond.
SOL was one of the few tokens to reach a new all-time high in 2024, reaching $264.50 on Nov. 22. However, the momentum could not be sustained, as SOL underperformed as the overall altcoin market cap increased by 18% since Nov. 22, while SOL’s price fell by 12%.
SOL/USD pair (blue) versus altcoin market cap (green), values in USD. Source: TradingView / Cointelegraph
Part of SOL's recent success can be attributed to Solana's SPL tokens, including memecoins. However, this sector has recently seen a significant downturn in both volume and price. Over the past week, Dogwifhat
WIF
tickers down
2,71 €
fell 8%, BONK
BONK
tickers down
0,00003511 €
recorded a 9% decline and Jupiter
Jupp
tickers down
0,9803 €
fell by 12%. Other projects, such as POPCAT
POPCAT
tickers down
1,06 €
and Wormhole (W), experienced a steep 11% drop over the same period.
Solana 7-day on-chain volumes, values in USD. Source: DefiLlama
More worrying is the 63% drop in onchain volumes on the Solana network during the week ending December 9, raising concerns about the sustainability of the recent price rally. However, it is important to note that this trend was not unique to Solana; Ethereum, BNB Chain, and Avalanche also recorded similar declines.
MEV 'sandwiching' strategy linked to poor SOL performance
While the exact reasons for SOL’s underperformance relative to the overall altcoin market remain unclear, some traders, including WazzCrypto, suggest that the ‘maximum extractable value’ (MEV) is the primary factor behind the recent downturn.
Source: WazzCrypto
A WazzCrypto post on X suggests that most value extraction on Solana is driven by ‘sandwiching,’ a ‘maximum extractable value’ (MEV) strategy where traders place orders before and after a target transaction to capitalize on the price fluctuations it triggers. The thread highlights a case where a single address purportedly executed 50% of the MOTHER token’s volume, while most traders recorded losses during similar token airdrops.
From a derivatives perspective, the crypto market crash on December 9 benefited SOL, as excessive leverage was removed from the system. SOL futures open interest fell by 12%, reaching the current level of 22.8 million SOL, and the cost of bullish leverage fell below 1% for the first time in over a month.
SOL perpetual futures funding rate (8-hour). Source: CoinGlass
After peaking at 6% monthly on December 5, signaling extreme optimism, the funding rate fell sharply on December 9, following the forced liquidation of leveraged long positions. Current market conditions appear healthier, particularly considering that total SOL futures open interest now stands at $5.2 billion.
Investor sentiment on SOL was further boosted by a $750 price target set by Bitwise, a cryptocurrency exchange-traded fund (ETF) provider. The firm cited increased institutional investment, an improved regulatory environment, and the arrival of “serious” projects on the network, which could further enhance its dominance in memecoins.
Additionally, traders are increasingly optimistic about a Solana ETF approval in the US, especially following the resignation of Securities and Exchange Commission (SEC) Chairman Gary Gensler. Given these factors, SOL investors have reason for optimism, with a favorable outlook for early 2025 and healthy derivatives markets.
