Why is Solana’s price up today?
The SOL price is up today because of increased network activity and a large asset manager’s study that highlights the token’s future potential. Solana, the Solana network’s native cryptocurrency, increased by 7.2% on May 6 as it looked to stabilize around $156. Despite failing to sustain that peak, SOL’s current price of $152 represents a 3.8% increase for the day and a 12% increase for the week.
The value of SOL increased due to a positive report from a major investment bank, an increase in Solana network traffic, and the implementation of native interoperability capabilities on a well-known decentralized exchange.
Increased competition has pressured SOL’s performance
Recently, SOL’s market performance has closed the gap on BNB Chain, the third-largest cryptocurrency by market value. On April 30, the margin increased to a 10-month high of $28.5 billion in favor of BNB but has subsequently narrowed to $18.4 billion.
The competition among blockchains focused on decentralized apps (DApps) has heated up in recent months.
The integration of Toncoin (TONNE) with Telegram, as well as the rise of Ethereum layer-2 solutions like as Base and Blast, have contributed to this spike. Despite Solana’s promotion of its capacity and decentralization, recurring challenges with failed transactions continue to impede the network.
Solana is seeing competition from other networks that provide low-cost transfers and deposit incentives, particularly since the cryptocurrency market faces several unfavorable circumstances.
These include outflows from U.S. spot Bitcoin exchange-traded funds (ETFs), regulatory measures against cryptocurrency mixing providers, and lawmakers taking a stricter posture overall.
For example, in a letter dated May 1, US Senators Elizabeth Warren and Angus King voiced worry about potential national security vulnerabilities posed by bitcoin miners in Iran.
Furthermore, in an April 24 interview, U.S. Representative Maxine Waters indicated that the Financial Services Committee was working on legislation addressing stablecoins and bank clawbacks.
In the face of such hurdles, SOL’s weekly gains of 12% are especially noteworthy. Part of this positive shift in mood could be attributed to a May 2 report by asset manager Franklin Templeton titled “Solana: Accelerated Adoption”. This paper focuses on significant gains in ecosystem fees, successful airdrops of key Solana SPL coins, and novel use cases.
The paper commends Solana for tackling congestion issues, emphasizing Firedancer, a validator client created by Jump Crypto to improve network scalability and performance. Franklin Templeton’s continued interest in Solana is based on recent functionality improvements like as NFT compression, decentralized prediction markets, and central limit order books.
On May 6, JupiterExchange, a well-known decentralized exchange on the Solana network, announced the incorporation of CloneProtocol into its routing mechanism. This connection enables Jupiter users to trade non-native Solana assets such as Arbitron (ARB) and Sui (SUI) without the use of bridges. The technology includes “cloned assets,” a new liquidity pool that only uses USD Coin, reducing risks for liquidity providers.
SOL network’s activity picks up, paving the way for Solana price growth
In addition to continued development within the environment, the Solana network has seen an increase in activity and deposits. The network’s total value locked (TVL), a metric that measures the amount held in decentralized apps (DApps) smart contracts, has hit its highest level since October 2022.
Solana’s TVL in SOL terms peaked on May 3, at 49.7 million, representing a 26% rise in two months. This growth was fueled by a $500 million investment in Sanctum’s liquid staking solution. In instance, Ethereum had a 9.5% gain in ETH terms within the same period, while the BNB Chain’s TVL decreased by 24%.
Solana reported a 29% weekly increase in active addresses engaging with DApps, driven notably by the liquid staking application Jito, which processed $312 million in transactions. This was followed by expansion in Marinade Finance, which had a $220 million transaction volume. According to DappRadar, Ethereum DApp volumes increased by 20% over the same seven-day period, whereas BNB Chain witnessed a 22% reduction.
While it is difficult to forecast if SOL’s price will remain above $150, bullish news from major investment banks, more activity on the Solana network, and ongoing advancements focusing on interoperability and reliability all point to growing investor interest.
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