- Solana’s price has exploded from $18 to $54 in the past few months, its highest level since May 2022.
- One factor that may have contributed to Solana’s rally is the bankruptcy of FTX.
- Another factor is the increase in leverage longs in the market.
- SOL’s futures open interest is also at its highest level since November 2021.
- Solana’s DeFi ecosystem is also showing signs of health, with TVL (total value locked) increasing steadily and reaching $538 million.
Solana has seen remarkable price action over the last week.
The cryptocurrency spent the most of 2023 under $40, after crashing below when FTX experienced bankruptcy in November 2022.
However, from September until date, SOL has surged from a local low of about $18 to being worth $54 per coin as of 11 November.
This also counts as Solana’s highest level since early May 2022.
But why is Solana’s performance so interesting?
Let’s go over a few things together.
FTX Bankruptcy: A Blessing In Disguise?
One of the biggest weights around SOL’s neck was the now-defunct exchange, FTX.
FTX experienced bankruptcy in November 2022, after it was discovered that its CEO at the time Sam Bankman-Fried was secretly stealing billions of dollars of customer funds.
SOL, at the time of the hack, was deeply involved with FTX and Alameda Research, and suffered a massive plummet in its price, along with FTX Token (FTT) and the rest of the crypto market.
However, as it turned out, FTX crashing, may have been a blessing in disguise.
Aside from removing the “paper-handed” investors as they are commonly called, FTX’s bankruptcy estate has massive tranches of SOL that they simply cannot sell.
According to the FTX liquidation plan, several conditions limit the way the exchange sells its crypto.
A good example is how most of the SOL tokens owned by FTX are either vested or locked.
This means that they cannot simply be sold at the drop of a hat.
Other than that, FTX has a weekly sell limit of $100 million that prevents billions of dollars worth of tokens from being dumped on the market.
According to this tweet from analyst Bluntz, the FTX liquidation has been gradual and orderly and is not causing any volatility flashes.
Open Interest Spikes and Fuels Solana’s Rally
There might be another explanation for SOL’s price recovery.
This factor is the amount of leverage longs in the market. And if you didn’t know what leverage longs are, they result when traders borrow funds to open more Solana trades, with the hopes that the price goes up.
Other than this, SOL’s futures open interest currently sits at about $771 million, the highest level since November 2021, when the cryptocurrency first hit its all-time high of $260.
This indicates that investors are getting interested in SOL and what it can do.
SOL’s weighted funding rate has also spiked recently and now sits at around 0.0139%
Even Defi Isn’t Left Out
The derivatives market continues to show strong bullish signs. But what about DeFi?
According to DefiLlama, Solana’s Defi ecosystem is also showing signs of health and is sitting at a value of $538 million.
This figure is rising steadily and is even up by about 10% over the last 3 days.
Solana is also the 8th largest Defi chain in terms of TVL at the time of writing.
Other Metrics Spike
According to TheBlock, Solana’s number of active addresses has also been on the rise.
This suggests that everyone including whales, sharks, shrimp and even fish have been actively involved in the growth of the network.
We can conclude from this, that the price growth in Solana has not been manipulated and may be 100% organic. This metric is up by almost 30% over the last week, and currently sits at around 272,000 active addresses today alone, at the time of writing.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.