Solana’s native token SOL (SOL) surged 22.5% from November 5 to November 7, hitting a seven-month high. The rally mirrored a broader altcoin rally, with Bitcoin (BTC) rising 17% to a new all-time high on November 7.
Much of the bullish momentum can be attributed to President-elect Donald Trump’s victory in the US presidential election and Republicans’ control of the Senate, which suggests the possibility of more innovation-friendly regulation in the cryptocurrency sector.
The increase in demand for SOL was accompanied by a surge in leveraged positions, with total open interest in Solana futures hitting an all-time high on November 7. Despite the higher risk of forced liquidation during SOL price adjustments, derivatives data points out that: Potential for further rise.
Solana futures incorporate open interest SOL. Source: Coinglass
SOL futures open interest surged to 21.1 million SOL on November 7, an 11% increase from the previous week and a nominal high of $4 billion. This reflects the strong adoption of SOL derivatives and signals growing institutional interest, but also potential risks.
Large futures positions can be monitored, which can make whales a target for companies looking to profit from short-term market volatility. However, in the derivatives market, long and short positions are always in balance. In other words, funding rates provide a window into which side wants more leverage.
Solana 8-hour average funding rate. Source: Coinglass
The current 8-hour SOL funding rate is 0.017%, which equates to approximately 1.5% monthly, indicating a neutral to bullish sentiment. Typically during periods of heightened market excitement, leverage costs for purchases can rise above 2.1%, so the current rate suggests moderate optimism and could potentially support further upward momentum.
Strong on-chain indicators support continued price growth for SOL.
Some analysts claim that SOL’s recent price rise has been primarily driven by the surge in memecoins. Platforms such as the Pump.fun token launch and Raydium decentralized exchange (DEX) have seen significant increases due to the memecoin craze. However, extensive development within the Solana ecosystem could push the price of SOL above $200.
source: catfish fish
Critics such as ‘CatfishFishy’ highlight the potential for “pump and dump” schemes orchestrated by “insiders” – a small group of wealthy investors who control much of the supply and leverage influencers and paid endorsements. The post also pointed out that some of TikTok’s audience are minors, raising concerns about potential regulatory scrutiny.
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Speculation that memecoins are the main driver of SOL’s rise to $194 overlooks key factors such as Solana’s Total Value Locked (TVL), which reached $6.64 billion on November 7, up 22% from the previous month, according to DefiLlama data. I’m doing it. Significant gains were seen in areas other than liquid staking, perpetual futures, leverage and lending, and memecoins.
As long as on-chain metrics remain solid and SOL derivatives show no signs of undue fear or greed, the Solana network’s competitive advantage in offering fast and relatively cheap transactions will continue to provide “free marketing” and significant user-centricity. We will secure the part. Bitcoin reached an all-time high.
Overall, there are no signs of weakness, suggesting a clear path for SOL prices to move higher.
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.