- Solana leads altcoins in the SOL ecosystem toward a price rally.
- Solana's latest spike in investor confidence comes from the network's fast transaction processing and scaling potential.
- Heightened institutional interest builds up in Solana, contributing to the altcoin's gains.
Traders holding Solana and coins of the SOL ecosystem are rewarded for their patience as the high-speed blockchain network hits a new all-time high.
Bulls push Solana ecosystem coins higher
The Solana blockchain focuses on speed, efficiency and security. It offers faster transaction processing at a relatively lower cost when compared to the Ethereum blockchain. This has attracted users to decentralized applications like NFT marketplace Solanart, built on the SOL network.
Solana has outperformed top cryptocurrencies Bitcoin and Ethereum several times in 2021; traders earned nearly 1,900% in profits by holding SOL for a year. Since SOL has a robust Layer 1, it eliminates the need for Layer 2 or scaling solutions (like MATIC that facilitates faster transactions for Ethereum).
On August 16, SOL noted the most significant social spike (social media mentions) in its 16-month history based on Santiment data. The euphoria pushed the altcoin to rank ninth among top cryptocurrencies by market capitalization.
Solana Social Dominance
At the time of writing, coins in the SOL ecosystem, like Chainlink (LINK), The Graph (GRT), Waves (WAVES) and Audius (AUDIO), are rallying. Most Solana-powered coins have noted double-digit gains close to 100% in the past seven days.
Solana ecosystem coins
One of the factors that triggered a rally in the SOL ecosystem is the launch of Solana's "Cross-chain" called Wormhole.
Wormhole connects Solana and the decentralized finance (DeFi) network and supports inter-blockchain message transfers. Itwent live on August 9, ahead of the price rise.
The interoperability protocol is facilitating communication between tokens and non-fungible tokens (NFTs), price data and blockchains that previously did not communicate with each other. Wormhole currently supports Terra, Ethereum and the Binance Smart Chain (BSC).
Traders can move assets and pass on messages without a lag on Wormhole, and it has set the stage for projects that plan to add cross-chain liquidity. This would boost the utility of Solana and the coins of the dApps in the Solana ecosystem.
Wormhole exposes crypto coins on the SOL blockchain to a liquidity boost and offers non-native assets an opportunity to enter SOL's DeFi ecosystem.
Solana's current price rally likely marks the beginning of a prolonged one since its competitors like the Ethereum blockchain that support dApps are plagued by high gas fees and network congestion issues when transactions hit a peak on the network.
Data from FalconX, a crypto focused brokerage and trading platform, shows that trading shops are piling in while hedge funds go short. Interest from crypto-focused institutions suggests a bullish outlook on SOL's price, and keeping in line with the narrative, Solana trading volumes have nearly doubled on FalconX.
Solana's decentralized finance ecosystem has grown exponentially. The market capitalization of all tokens staked in Solana-based dApps is fast approaching $2 billion.
The team behind SOL claims that its blockchain is capable of processing more than 50,000 transactions a second. This claim rivals Visa's 65,000 transaction messages a second. Through "Wormhole," the "Ethereum killer" plans to take on competitors like Cardano, Polkadot and traditional finance payment leaders like Visa.
The cryptocurrency analyst behind the Twitter handle @Pentosh1 suggested that SOL is in price discovery mode, and a drop between $56 to $60 should be considered a buying opportunity or a "steal."
$SOL In price disovery
— Pentoshi Wont DM You (@Pentosh1) August 17, 2021
Imo if $56-60 comes that an absolute steal now that it has made new ath's. That should be new support and the sky is the limit. Got some bids filled at the daily open
Already up big today. pic.twitter.com/WpWhvd7GtW
Overall, the price rally of SOL ecosystem coins is set to continue with a further liquidity boost from Wormhole and the increasing interest of retail traders.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.