Though the broader cryptocurrency market sank Monday morning, nascent token Solana tacked on to an explosive rally, hitting a new all-time high above $100 thanks to growing investor fervor around the Ethereum competitor’s platform, which also supports the smart contracts necessary for booming decentralized finance applications and non-fungible tokens.
The price of Solana soared 12% to a high above $103.72 on Monday morning, making the token, which debuted only 18 months ago, the world’s eighth-largest cryptocurrency with a market value of slightly more than $30 billion by 10:45 a.m. EDT.
“Popular altcoin Solana has reaffirmed its status as an outlier in the market,” Jonas Luethy, a trader at London-based cryptocurrency broker GlobalBlock, wrote in an email, noting Solana was the only top 10 cryptocurrency rising in value over the past 24 hours.
Luethy pointed to the booming popularity of NFTs, the blockchain-based digital art collectibles increasingly gaining traction among celebrities, as the catalyst behind Solana’s rally.
According to Luethy, NFT sales in August have already hit a record of about $900 million, more than triple their previous best month in May.
Over the weekend, Solana hit another milestone: The value of decentralized finance projects—which have caught the eye of regulators—pinned to the token’s blockchain surpassed $3 billion for the first time ever, nearly tripling this month alone.
Though the value of the broader crypto market has stayed virtually flat in the past week, Solana’s price has surged a staggering 37%, lifting gains this year to nearly 70%.
In a report last Tuesday, crypto investment firm CoinShares revealed Solana posted larger investment inflows than any other cryptocurrency over the past week, picking up more than $7 million in net investments, compared to $3.2 million and a loss of $2.8 million for Ethereum and bitcoin, respectively. Investment strategist James Butterfill noted Solano’s more flexible software and faster transaction speed, compared to larger rival Ethereum, has helped it gain traction among investors and software developers.
Solana’s stunning rally this past week has headlined growth among a slew of so-called altcoins, or cryptocurrency alternatives to market leaders bitcoin and Ethereum. Solana’s support for smart contracts has helped it take advantage of the buzz around NFTs and DeFi, but other players have signaled plans to dive into the space as well, with Cardano, for example, planning to launch a software upgrade next month in order to begin processing smart contracts.
What To Watch For
Regulation. Securities and Exchange Commission Chair Gary Gensler hasn’t been too keen on the growing popularity of DeFi, saying at a conference last month that the sector isn’t immune to regulation. Last week, the agency signed a six-figure deal with blockchain analytics firm AnChain.AI to help it investigate DeFi transactions. “The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets,” AnChain CEO and co-founder Victor Fang told Forbes.
Though its price has soared nearly 220% over the past month, Solana plunged nearly 60% this summer as the broader cryptocurrency market crashed amid intensifying regulations in China.