Solana’s native token, SOL (SOL), has seen an impressive surge of 22% on November 10th, surpassing the $54 mark for the first time since May 2022. This surge is noteworthy as it occurred despite the continuous selling of SOL tokens by FTX’s bankruptcy estate. In September 2023, the Delaware Bankruptcy Court approved the sale of the failed exchange’s assets, which included 55.75 million SOL. However, investor enthusiasm for SOL’s price increase may be attributed to the fact that some of the tokens from the bankruptcy proceedings are either vested or locked. Moreover, there is a weekly sale limit of $100 million imposed as part of the FTX liquidation plan. Initially, there were fears of asset liquidation impacting SOL, but as investors realize the limited impact of the sales, these fears have transformed into hope. The resilience of SOL during the FTX bankruptcy token dump has impressed market participants, as highlighted by trader and independent analyst Bluntz.
Impressive Growth in Solana’s Futures Open Interest
The substantial 39% weekly gains of SOL have pushed its futures open interest to $745 million, the highest level since November 2021, when SOL reached its all-time high of $260. While this growth in futures markets is significant, it is crucial to examine SOL’s funding rate for a more nuanced perspective. SOL’s current futures funding rate represents a 0.5% weekly cost for leverage longs, which is not excessive given the prevailing bullish momentum. However, it is essential to note that the funding rate has shifted significantly from three weeks ago when leverage shorts were paying for leverage use. The rally in derivatives markets may have driven SOL’s surge, but there is solid evidence indicating growth in other aspects of the Solana ecosystem as well.
Solana’s total value locked (TVL), which measures the amount deposited in its smart contracts, has reversed its declining trend after six consecutive weeks. Additionally, Solana’s DApps have experienced a 10% increase in deposits over the last three days. While the current level of 11.1 million SOL is still below the 30 million SOL held prior to the FTX exchange bankruptcy, this recent trend suggests that the worst period for the Solana network may be behind us. The growth in TVL is not solely driven by a few large holders inflating the numbers. The number of active addresses has also seen a 28% increase, indicating a surge in network activity. Interestingly, while competitors experienced declines, Solana now ranks as the fourth-largest blockchain in decentralized finance (DeFi) TVL. Ethereum, the market leader, faced a 22% drop in DeFi active users, according to DappRadar.
Despite the positive developments mentioned above, some investors are questioning the sustainability of SOL’s bull run above $54. Solana’s current market capitalization of $22.8 billion has surpassed Polygon’s $7.8 billion by nearly threefold, even though both networks have comparable DeFi TVL. Furthermore, Solana protocol’s accumulated 30-day fees amount to $1.9 million, compared to Polygon’s $1.6 million, according to DefiLlama. However, these figures pale in comparison to BNB Chain’s $9.1 million fees, raising doubts about the valuation after SOL’s recent rally. While there is currently no evident reason to bet against the trend, it is worth considering the fundamentals that point to limited room for further upside.
Solana’s native token, SOL, has experienced a significant surge amidst the selling of tokens from FTX’s bankruptcy estate. The resilience of SOL and its impressive growth in futures open interest, TVL, and DApp deposits have caught the attention of investors. However, questions remain about the sustainability of SOL’s bull run and its valuation compared to other networks. While there is no immediate reason to doubt the current trend, it is essential to closely monitor the market and consider the underlying fundamentals.