Solana (SOL) is trading above $180 again after struggling to regain the level for nearly three months. The 16.3% one-month rise to $183 coincided with Bitcoin (BTC) showing gains within the all-time high of $1,000. But does Solana-related data support a move to higher levels?
Total altcoin market cap (left) and SOL/USD (right). Source: TradingView
On-chain and derivatives indicators suggest that the bull market for Solana may have just begun and that a further rise above $200 is likely. Data shows that the Solana Network’s total value locked (TVL) is steadily increasing, with the amount secured by its smart contracts reaching a two-year high.
Solana Network Total Value Locked, SOL. Source: DefiLlama
On October 26, Solana network deposits reached 42.5 million SOL, the highest since September 2022. Key contributors include Jupiter, with deposits up 13% over the past 30 days, Raydium, and Sanctum, up 18%. , there was an inflow of 17% during the same period.
Solana ranked second in the decentralized applications category.
Solana has now surpassed the BNB chain to become the second largest network in terms of floating TVL, but still lags 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. The service currently ranks 10th in the Solana ecosystem, suggesting room for further growth.
In comparison, Ethereum’s TVL has increased 2% over the past 30 days, while the BNB chain has decreased 5%. It is important to note that looking at deposit numbers alone can be misleading, as many decentralized applications (DApps), including games, collectibles, Web3 infrastructure, social networks and marketplaces, do not require a large deposit base.
Blockchains ranked based on 7-day DEX trading volume (USD). Source: DefiLlama
Solana recently surpassed Ethereum in decentralized exchange (DEX) trading volume, maintaining its position with a 19% increase over the past seven days. In contrast, activity on Ethereum surged 6%, while the BNB chain fell 3%. Overall, Ethereum’s layer 2 ecosystem volume increased 5% over the same period, making Solana the clear winner.
Notable contributors within the Solana ecosystem include Raydium, up 20%. Lifinity, with a 49% increase in volume; Phoenix saw a 34% increase in activity in just 7 days. A significant portion of Solana’s increased flows can be attributed to the memecoin sector, raising questions about the sustainability of this growth.
For example, MOODENG surged 178% last week, Goatceusmaximus (GOAT) surged 71%, and Nosana (NOS) surged 70%. It is impossible to predict how long a memecoin rally will last, but history shows that only a few are able to maintain their value over the long term. Notable exceptions include Shiba Inu (SHIB), Pepe (PEPE), and Dogwifhat (WIF).
relevant: Bitcoin on its way to $80,000, driven by bullish derivatives trend
Low leverage leaves room for price appreciation
In addition to the on-chain indicators, the lack of excessive leverage in SOL futures suggests that the rise to $182 on December 29 was merely the early stage of a broader bull cycle.
SOL Perpetual Futures have an average funding rate of 8 hours. Source: laevitas.ch
The current funding rate of 0.01% means long positions (buyers) are paying leverage costs, which equates to approximately 0.9% per month. During periods of high demand from retail buyers, this rate can exceed 2.1% per month. Therefore, the current level is considered neutral. When combined with positive on-chain indicators, this data points to healthy SOL spot buying activity, leaving room for potential profits of over $200.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.