Solana (SOL) cryptocurrency hits new high as altcoins rival Bitcoin and Ethereum. Here’s why

Solana (SOL) cryptocurrency hits new high as altcoins rival Bitcoin and Ethereum. Here’s why

Solana’s SOL token rose to become the seventh-most valuable cryptocurrency this week, overtaking Dogecoin on Tuesday and rising by 26 per cent to reach a record high of $125.98 (€106.55), before later slipping back to eighth position.

In the last month, Solana has soared almost 220 per cent.

The token made its debut only 18 months ago but now has a market value of over $30 billion (€25 billion). So, what are the reasons for Solana’s rise in the cryptosphere?

The main reason Solana has attracted so much attention recently is because of the network’s entry into non-fungible tokens (NFTs), which can be anything digital such as art or music that are sold with tech.

Solana launched Degenerate Ape Academy, which sold a collection of pictures of cartoon apes. 10,000 of them sold in the first 10 minutes, which then drove the SOL token higher as people needed the cryptocurrency to buy the cartoon apes.

Solana has also been helped by the August rally of NFTS, which hit a record in sales of about $900 million (€761 million).

Solana has also focused on DeFi (decentralised finance) projects, which cuts out financial institutions and intermediaries and executes financial transactions over the blockchain in recent months.

What is Solana doing differently?

Solana has prioritised smart contracts, which are programmes stored on the blockchain that run when predetermined conditions are met and automate agreements so that everyone is certain of the outcome. They cut out any intermediary and speed up the process.

This has allowed Solana to take advantage of the NFT market and DeFi.

But other cryptos such as Cardano are also planning to enter the smart contract space, so there will likely be increased competition.

Solana also uses the proof-of-history (PoH) consensus, which means that messages are grouped together so that there is proof and a record of the time of each message. The concept allows for greater scalability and trust on the blockchain.

One of the network’s other main promises is that its users will not be surprised with increased taxes and fees.

Solana logo GETTY VIA CANVA

Traders have also been speculating on a possible new feature Solana is set to launch in early September but little is known on what the feature could be.

Is Solana a rival for Bitcoin and Ethereum?

According to crypto investment company CoinShares, Solana has picked up more than $7 million (almost €6 million) in investment over the past week. Whereas Bitcoin saw a loss of $2.8 million (€2.3 million) in investment. But Solana is unlikely to knock Bitcoin from the top spot anytime soon.

Solana is seen more as a rival to Ethereum as the tech is cheaper and claims to offer a faster transaction speed, at 50,000 transactions per second.

Are there any threats to Solana?

As more blockchains begin to use smart contracts and move into NFTs, Solana will face more competition in the space it has carved for itself.

But there is another threat. Crypto regulations in China saw Solana’s price fall 60 per cent this summer amid the crypto market crash.

The United States is also investigating the cryptocurrency market, which could pose another threat to the values of all tokens.

Solana price hits new all-time high as SOL emerges as top Ethereum killer

Institutional demand has increased over the past two weeks as Osprey Funds registered a Solana trust ahead of competitor Grayscale.

The launch of NFT collections on Solana has created a positive feedback loop for Solana’s price.

Charles Hoskinson, the founder of Cardano, shows interest in Solana.

Solana’s “wormhole project” gains popularity in the cryptocurrency ecosystem, traders and analysts await the launch of the three-way cross.

Solana price crosses $100; wormhole project triggers rally

Solana’s “wormhole” project is a bi-directional bridge that allows projects, platforms and communities to move tokenized assets across blockchains. The project also facilitates message exchange across blockchains, and more decentralized applications now benefit from Solana’s high speed and relatively low cost.

Currently, the “wormhole” is live and supports the exchange of assets from the Ethereum blockchain. The Solana team has plans to expand the bridge and make it a three-way cross. This implies that the project will include Terra.

The community is awaiting further updates on the project, and it has garnered attention from traders and analysts. The 2.0 launch of the cross-network bridge is a trigger for SOL’s ongoing price rally.

As Solana gains popularity as a faster and cheaper “Ethereum alternative,” it has captivated institutional investors. Osprey Funds, a digital asset investment firm, has applied to the Securities & Exchange Commission (SEC) for a Solana trust, ahead of competitor Grayscale Investments, implying there is an increase in demand from institutions.

Institutions have a bullish outlook on Solana due to the increase in the on-chain activity on the altcoin’s blockchain. The launch of the Degenerate Apes NFT collection drove a surge in transaction volume on the SOL network, garnering attention from creators and token holders in the Solana ecosystem.

Solana’s rival blockchains are competing with it for dominance in the non-fungible token and decentralized finance ecosystem. Charles Hoskinson, founder of Cardano, one of SOL’s top competitors, recently commented on the altcoin’s updates and progress.

@solana you guys seem to be making waves. Congratulations. Where can I learn more? — Charles Hoskinson (@IOHK_Charles) August 30, 2021

Hoskinson is likely interested in SOL’s technical progress since Cardano has similar milestones in onboarding decentralized applications, building cross-network bridges, and facilitating token transfer across ecosystems.

SOL price is up 88.5% in less than 15 days, and the price has crossed $100 a few times today. A cryptocurrency analyst behind the Twitter handle @CerbulBTC had predicted SOL’s rally to $100 less than a week ago.

I don’t think this is the top of $SOL #Solana price.

My $67 long-term target has been hit, took a long time, I thought it wouldn’t get there so fast anyways.

New targets on the chart, with the nearest psychological price of $100.

Close links w/ FTX.#SolanaSummer #SOL https://t.co/LAHLFxPwAO pic.twitter.com/8XMV6BDkDa — Cerbul (@CerbulBTC) August 23, 2021

The analyst rejected the previous rally as the altcoin’s top and stated that the next psychological target for SOL is $100. Overall, SOL is currently in the price discovery mode.

Solana Price Prediction: SOL Sizzles Ahead of ‘Ignition’ Event

The Solana price surged to $120 this morning as investors react to a tweet from Solana’s official account suggesting today will bring something special. Today’s jump extends Solana’s (SOL/USD) six-week winning streak, which has added over 400% to the price. Much of the bullish run is due to Solana moving into Non-fungible Tokens (NFT’s) and a resurgent crypto market. However, it was a well-timed tweet that fueled the highly-anticipated clearance of $100.

On the 28th, Solana posted a teasing video of a lighter, accompanied by the handle ‘Ignition”. The tweet was light on details. However, it promised an announcement would be made today. This set crypto Twitter alight with speculation, with many suggesting an inflationary token burning event could be on the cards.

Following the tweet, the Solana price exploded more than 30% to a record $119.67, almost double the $61.55 all-time high from May and 7,300% higher year-to-date. This incredible run has lifted Solana’s market cap to a staggering $34 billion, ranking SOL as the 8th-most valuable crypto asset behind Dogecoin (USD/DOGE).

However exciting today’s revelation will be, investors must be wondering if it will justify Solana’s recent appreciation. In the last week alone, SOL has jumped 80%. Furthermore, six weeks ago, the Solana price was $22.00. This could lead to extreme reversal if today’s announcement is anything less than groundbreaking.

SOL/USD Price Forecast

The daily chart highlights the vertical nature of the recent price rally. This has lifted Solana deep into overbought territory, and the Relative Strength Indicator (RSI) is dangerously high, at 86.48. Turning to the Monthly chart, the rally looks even less sustainable and is reminiscent of Bitcoin in 2017.

However, the reality is that the Solana price bubble may keep inflating for some time, or it could pop any second. The trouble with parabolic rallies is that it’s hazardous taking a position in either direction. And whilst Solana may be the next Ethereum (ETH/USD), it also may not. On that basis, a well-thought-out Solana price prediction is not possible at the moment. However, sometime today, the price will either ignite or go up in flames.

Solana Price Chart (Daily)

Monthly Chart

For more market insights, follow Elliott on Twitter.