Solana (SOL), currently the seventh-largest cryptocurrency by market cap, has been on a redemption arc that has seen the token rallying by over 50% in the past two weeks. The surge was triggered by US-based cryptocurrency exchange Coinbase announcing on October 25 that it had “strategically increased” its Solana holdings by purchasing 2.2 million SOL worth $89.43 million.
Since then, the cumulative volume delta (CVD) – a trading indicator that measures the net difference between buying and selling volumes of an asset over a specific timeframe – of SOL has increased by nearly $2 million on Coinbase, indicating net capital inflows.
Positive values on CVD indicate an excess of purchase volume, and negative values suggest an excess of sales volume
Solana Rallies By 50% Following Coin Base’s “Strategic” Buying Spree and VanEck Report
Solana’s CVD on Binance and Kraken turned positive on Monday. Meanwhile, South Korean exchange Upbit sold nearly 4 million SOL (approximately $16.2 million), where it has been trending on the negative side for almost two weeks.
According to Riyad Cary, an analyst at Paris-based blockchain analytics firm Kaiko, the median order size of SOL on Coinbase has been more than any on other exchanges. He says this could be a sign that institutional investors may be bidding for the token through Nasdaq-listed crypto platforms.
Coinbase’s Solana buying spree came after Wall Street asset management behemoth VanEck published a report predicting a bullish case scenario where SOL could reach a valuation of $3,200 per token by 2030. According to the report, Solana would achieve high valuations in a scenario where the blockchain would become the first to deploy applications with over 100 million active users.
But, Solana’s recent surge has yet to reflect in on-chain activity. According to on-chain data aggregator DefiLlama, the total value of assets locked in Solana-based decentralized finance (DeFi) protocols has declined from 12.03 million SOL (approx $50.3 million) to 10.23 million SOL (approx $41.9 million). This was the lowest TVL on the blockchain since April 2021.
However, the TVL on Solana-based decentralized exchanges and active addresses on the network has been on the rise but not enough to justify the token’s latest surge.
Liquidation of FTX’s $1 Billion SOL Stash Did Not Hinder the Token’s Historic Rally
There are also concerns about the token’s sell pressure affecting the market after it was reported that FTX has unstaked another $65 million worth of SOL. This was on top of the millions of SOLs that were moved to various crypto exchanges over the past week.
Digital asset manager 21Shares noted in a report that the FTX-Alameda bankruptcy estate had recently moved $31 million worth of SOL to exchanges with the intention of raising capital.
In August, the US Bankruptcy court hearing the FTX case granted the estate permission to liquidate its massive crypto holdings, which included a $1.16 billion stash of Solana. There were fears among investors that a massive amount of SOL could be dumped on the market, triggering a mass sell-off scenario that could jeopardize the blockchain’s future.
Crypto analysts are now suggesting that concerns about FTX selling the SOL tokens en masse have so far been proven to be overblown. The FTX-Alameda estate has since staked roughly $122 million worth of SOL, which has helped ease negative market sentiment.
Solana’s resurgence as one of the top-performing crypto came as a surprise to many experts who were expecting the project to go up in flames following the collapse of disgraced former billionaire Sam Bankman-Fried’s FTX crypto exchange and hedge fund Alameda Research. Both companies were major investors in the Solana ecosystem.
Last week, CoinShares’ head of research James Butterfill noted that investors have flocked to Solana-focused funds, which recorded $24 million in net inflows – its largest weekly influx since March 2022.
Rising On-Chain Activity, Influx of Funds, and Network Upgrade Linked to Solana Rally
Market analysts attribute Solana’s price recovery to rising on-chain activity, a massive influx of funds into SOL-based platforms, and a recent upgrade to its protocol that reduced validator hardware requirements and added an optional zero-knowledge-compatible encryption mechanism for verifying transactions. Defying all odds, the token powering presumably the world’s fastest blockchain is up nearly 350% this year and by 170% in year-to-date ratio.
At the time of writing, Solana (SOL) is trading at $41.32 – up 2.6% from the previous day’s price and an 11% rise in the past week. The total market capitalization of the network currently stands at $17.1 billion.