Why is Solana (SOL) price up today?

December 12, 2024December 19, 2024 Nxtgen Virtue bitcoin, bitdenex, crypto, cryptocurrencies, cryptonews

SOL price is up today as significant developments within the layer-1 ecosystem led to a rise in Solana network use. Solana SOL $212.87 price is up today, buoyed by a significant recovery in the broader cryptocurrency market. SOL’s rebound follows Bitcoin’s recovery back above $100,000 as a number of technical and onchain indicators point to further gains for the layer-1 token. Data from Cointelegraph Markets Pro and TradingView revealed that SOL’s price was $230, up more than 6% in the last 24 hours and recouping all the losses incurred on Dec. 11.

The smart contract token has performed well over the last few weeks, rising more than 45% since Nov. 5, and it’s up 121% year-to-date. Its market capitalization is $109.25 billion, making it the fifth-largest crypto by market value.Let’s look at the factors driving Solana price up today.

Solana ZK-rollups integration backs SOL’s upside

The smart contract token has performed well over the last few weeks, rising more than 45% since Nov. 5, and it’s up 121% year-to-dateIn addition, the deployment of ZK-based scaling and ZK Virtual Machines (ZKVMs) by teams like as RiscZero and Succinct Labs allows for arbitrary onchain calculations that are not limited by Solana’s computational capabilities.

These advancements are critical in preserving Solana’s position as a blockchain capable of handling large throughput demands while retaining privacy and security. This boosts user confidence in the network and increases demand for SOL, which raises its price.

In addition, the implementation of ZK-based scaling and ZK Virtual Machines (ZKVMs) by teams such as RiscZero and Succinct Labs enables arbitrary onchain computations that are not limited by Solana’s compute capabilities. These developments are instrumental in maintaining Solana’s edge as a blockchain capable of handling high throughput demands while ensuring privacy and security. This increases user confidence in the network and heightens demand for SOL, which positively impacts its price.

Increasing network activity backs SOL price rise

SOL’s price rise on December 11 comes after an increase in onchain activity as more users interact with the network, which contributes to the growing momentum. According to DefiLlama data, the total value locked (TVL) on the Solana network climbed dramatically from $5.6 billion on November 5 to an all-time high of $9.5 billion on December 7. This 70% increase shows that users and developers are becoming more engaged with the network.

Additional data from Blockworks Research demonstrates that SOL’s price hike on December 11 was preceded by a significant surge in the network’s economic activity. The chart below illustrates that Solana’s monthly actual economic value—all revenue streams, including base and priority fees—increased from $158 million in October to an all-time high on October 24 to $409 million in November.

Moving averages are in Solana’s favor

To cap an extended two-week correction, SOL gained support from a significant demand zone on its downside. The $200 level and the 50-day exponential moving average (EMA) at $213 define this area.

Solana retested this support zone on November 11 and 16, before surging to fresh all-time highs above $264 on November 22nd. This means that each time the price retests this zone, more buyers accumulate within it, increasing demand-side pressure. However, upon rebounding off this demand zone, it ran with resistance between $230 and $242. This means that bulls must overcome this level in order to ensure a long-term rebound.

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