Solana’s cryptocurrency, SOL, saw an 18% increase in value over the week leading up to February 13, with its price reaching $115. This rise allowed Solana to overtake BNB in market size, becoming the third-largest cryptocurrency, not counting stablecoins.
The increase in SOL’s value is attributed to new features like airdrops and Solana’s ability to offer a cheaper and easier-to-use platform than its rivals. But is this enough to push its price to $120 or more?
Some seasoned crypto investors believe Ethereum’s rollup solutions, which aim to scale and reduce costs, might retain investors within its ecosystem. However, newcomers might prefer Solana’s straightforward user experience. This preference also extends to launching non-fungible tokens (NFTs) and airdrops, which can be more efficient on Solana during high-demand times.
Despite its advantages, Solana has had its share of technical difficulties, including a five-hour outage on February 6, which temporarily halted deposits and withdrawals of SOL and related tokens. Over the past two years, the Solana network has faced twelve such outages.
On the bright side, Solana’s close-knit development community can quickly implement software updates, which can take much longer on Ethereum-based networks. This swift response to issues is one reason the recent network downtime didn’t significantly affect SOL’s price.
As for SOL’s future price direction, it often follows Bitcoin and general market trends. To gauge whether Solana’s recent price surge above $110 is here to stay, one should look at the network’s usage, a key driver of SOL demand.
However, a preliminary look at app activity on Solana shows a decrease in active addresses and a slight volume increase over the past week. In contrast, BNB Chain and Polygon saw nearly a 30% rise in app volumes. Although Solana and BNB have similar market sizes, Solana’s app activity is significantly lower. This discrepancy raises questions about SOL’s potential to maintain a price above $120 and achieve a higher valuation in the future.
Despite these concerns, Solana’s network processed 91.4 million transactions in the last week alone, indicating its strong capacity. If app activity increases, driven by airdrops or other factors, SOL’s price could be positively impacted.
