Solana’s 2% Gain: Can It Reach $200?

The native token of Solana, called SOL, experienced a 2% gain on March 14, even though it didn’t sustain the $173 level. This increase is quite impressive considering that the wider cryptocurrency market was experiencing a 4% downturn. Currently priced at $164, SOL has seen a significant 36% increase since March 5, which has made investors wonder if there are still catalysts that could push it towards the $200 mark.

The recent decline in the crypto market can be attributed, at least in part, to a notice from Hong Kong’s Securities & Futures Commission (SFC) on March 14. The notice stated that the Bybit exchange is not authorized to offer lending and derivatives products in the area. Bybit is the second-largest derivatives exchange and has a substantial $15.1 billion in open interest.

The release of the U.S. Labor Department’s Producer Price Index (PPI) report influenced investor sentiment. The report showed a 0.6% increase in the PPI from January to February, which reduces the likelihood of an interest rate reduction by the U.S. Federal Reserve on March 20.

Another factor that may have hindered SOL’s momentum is the introduction of reduced gas fees by Ethereum’s Dencun upgrade on March 13. Transactions on Ethereum’s layer-2 decentralized exchange, Base, are now significantly cheaper than those on Solana. For example, on March 14, the fee for a swap on a Solana DEX was $0.37, while a comparable transaction on Base’s DEX was only $0.02.

Despite these challenges, there is still considerable excitement surrounding Solana’s memecoins and airdrops such as Dogwifhat (WIF), BONK, and Jupiter (JUP). Coinbase, a leading U.S. exchange, even created a webpage titled “How to Buy Jeo Boden (BODEN),” which directed readers to CoinMarketCap for listings. This mention gained significant attention and views on social media.

This excitement over upcoming airdrops has led to increased usage of Solana’s decentralized applications (DApps). In the last seven days, there has been a 13% rise in Solana’s total value locked (TVL) and a 24% surge in DApp volumes. In comparison, Ethereum saw a slight decline in TVL but an 11% increase in DApp volumes. Solana still trails behind BNB Chain and Arbitrum in terms of absolute TVL figures.

Despite concerns about its centralization and stability compared to Ethereum, activity on the Solana network continues to grow. SPL tokens have secured multiple listings on leading centralized exchanges, attracting investors to purchase SOL tokens to participate in airdrop programs. This increased demand makes the $200 target price for SOL seem achievable.

To determine if traders are still optimistic about SOL after its price surge, it is important to examine the demand for leverage positions in futures markets. The current funding rate for SOL is 0.05%, which is somewhat costly for long position holders with leverage, but not unusual in bullish market conditions.

Despite facing challenges and competition from Ethereum, Solana’s SOL token has experienced significant gains recently. Excitement over upcoming airdrops and increased activity in Solana’s DApps has contributed to its growth. While there are still concerns, the $200 target price for SOL remains within reach.