Solana’s SOL token faced strong resistance at $102 on January 17th, leading to a 23% correction to a five-week low of $78.60 on January 23rd. However, the token quickly rebounded by 10% in less than 24 hours, signaling a potential end to the bearish price action. Traders are now questioning the sustainability of this recovery and whether SOL can surpass the $90 mark once again.
One factor contributing to this movement is the introduction of “token extensions” on the Solana network. These extensions, which were included in the v.1.17 release of the Solana Labs validator client on January 19th, enable confidential transfers to hide balances, transfer hooks for gated access, and the ability to charge fees at the protocol level. These functionalities are designed to cater to enterprise applications and comply with regulatory requirements.
Another reason for optimism is the development of Firedancer, a third-party validator client created by Jump Crypto. This solution aims to enhance Solana’s processing capabilities to handle millions of transactions per second and support parallel processing (sharding).
Furthermore, Solana’s network stability has improved significantly compared to its competitors. While other platforms, including Ethereum layer-2 scaling solutions, experienced outages in 2022, Solana maintained its performance throughout 2023.
The successful airdrops of Solana SPL tokens to centralized exchanges, such as Jito’s JTO staking solution and the BONK memecoin in December 2023, also contributed to the demand for SOL tokens. Users rushed to participate in these airdrops, both confirmed and speculative, leading to increased interest in Solana and boosting network activity.
Despite a 28% decline in SOL’s price over the past 30 days, Solana’s primary decentralized application (DApp) metric showed strength in January. The network’s total value locked (TVL) reached 15.3 million SOL, nearing a three-month high. This indicates that despite the price drop, users are still actively depositing funds into Solana’s smart contracts.
While Solana’s transaction activity and volumes have experienced significant growth, it still lags behind competitors like Ethereum and BNB Smart Chain in absolute numbers. However, in the last seven days, Solana witnessed a 6% transaction growth and a 12% increase in active DApp users, outperforming Ethereum, BNB Chain, and Polygon in terms of growth.
Notably, Solana’s DApps, such as Jupiter Exchange and Raydium, have attracted a substantial number of active users. Although they fall short of PancakeSwap on BNB Smart Chain and Uniswap on Ethereum, the strong DApp activity on the Solana network suggests that a push towards $90 and beyond is feasible.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and exercise caution when making investment decisions.