The price of altcoin Solana’s SOL gained 20% between September 28 and October 6. But is this rally moving in tandem with Bitcoin or is it driven by other factors? Before the price breakout – or perhaps before its recovery – SOL faced a turbulent period after a US court approved the $1.3 billion sale of SOL from the bankrupt FTX exchange. Here are the details…
Relationship between altcoin SOL and FTX
The bankruptcy court took measures to ensure that the liquidation of FTX assets does not become a burden for the crypto market. He requested that the sales be made in weekly batches through an investment advisor, in accordance with predetermined rules. After an initial impact that dropped the price of SOL to a two-month low of $17.34 on September 11, a degree of confidence emerged among the bulls as it re-established the $20 support on September 29. This move coincided with a successful upgrade to version 1.16, increasing SOL by 16% over the next seven days.
SOL’s rise has also been fueled by growth in the use of decentralized applications (DApps) and an increase in non-fungible token (NFT) volumes on Solana. SOL’s price is currently attempting to form a support at $23 and solidify its position as the fifth-largest cryptocurrency by market cap (excluding stablecoins). In particular, it is trying to surpass Cardano (ADA)’s $9.22 billion market cap. When analyzing networks focused on DApp execution, the number of active users should be a top priority. Therefore, one should start by measuring the addresses associated with smart contracts, which act as a proxy for the number of users.
The increase in activities attracted attention
It is noted by analyst Marcel Pechman that the increase in activity is consistent across all sectors, including NFT markets, decentralized finance, collectibles, social and gaming. Additionally, Solana’s active addresses interacting with DApps exceeded those of Ethereum, which was limited to 55,230 during the same period. Solana is gaining traction in the NFT market thanks to its cost-effective and scalable solution as data is compressed and stored on-chain. This allows for more viable production in larger quantities as it requires lower printing fees, allowing content creators to reach larger audiences.
Over the past seven days, the Solana network has surpassed Polygon in NFT sales, gaining $6.8 million in value, according to CryptoSlam. In September, the situation was reversed, Solana sold a total of $ 23.9 million in NFTs and the Polygon network sold $ 31 million in NFTs.
Network upgrade affected price
The potential driving force behind SOL’s recent 20% price increase was the network upgrade to version 1.16 on September 28, which introduced a “gating system” to ensure new features are gradually enabled on the network. This process helps maintain network stability and prevents problems caused by sudden changes. Another notable change in this update is “private transfers,” which use zero-knowledge proofs to encrypt transaction details, increasing user privacy. The release also includes improvements in RAM usage for validators, resizable data accounts, and a mechanism to identify corrupt data.
Overall, this update marks a significant milestone in its development, bringing improved efficiency, privacy and security to the Solana network. Despite Solana’s competition with other blockchain networks, there is no doubt that Ethereum layer-2 solutions are gaining more traction in terms of total value locked (TVL) and activity. For example, Arbitrum has a TVL of $1.73 billion and Optimism has $637 million, according to DefiLlama. Both are far superior to Solana’s $326 million. While Solana continues to make progress on privacy, scalability, and security, external factors beyond the FTX bankruptcy drama are also coming into play, making the $23 resistance harder to break than expected.
Golden Cross warning for altcoin
Meanwhile, according to Arman Shirinyan, we should be ready for a golden cross in altcoin Solana. According to the analyst, as of the latest data, Solana is positioned at the local peak of its current trend, indicating a potential upward transition in the near future. Currently priced at $22, the crypto maintains its stance above the 50-day moving average, a critical indicator. The convergence of moving averages is a phenomenon closely watched by market participants. In Solana’s case, the moving averages are converging, indicating the possibility of a “golden cross.” This pattern occurs when a short-term moving average, such as a 50-day moving average, crosses above a long-term moving average, such as a 200-day moving average. Historically, this pattern has been a bullish signal, often indicating the potential start of a long-term uptrend.
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