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SOL enters top-5 by capitalization with a 300% growth since mid-autumn

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On December 20, SOL, the native cryptocurrency of Solana blockchain, entered the top 5 cryptocurrencies by market capitalization, overtaking Ripple (XRP). Over the past two months, the asset has risen over 300% and outperformed many other top cryptocurrencies. This price movement is largely due to the fact that projects like Jupiter, Jito, and Pyth Network have attracted interest in the entire ecosystem with their rounds of airdrops. Let’s see how SOL became a leader and whether it has a real potential in the market.

How SOL entered the top-5 by market cap

On December 29, 2022, SOL reached its lowest point at $8. This happened amidst investor fear after the November collapse of the FTX exchange, which had been the largest investor in the Solana ecosystem.

Amusingly, the next day, Ethereum co-founder Vitalik Buterin tweeted that Solana "has a bright future" as "the awful opportunistic money" had exited and "the smart developer community" stayed. Since then, SOL’s price has been experiencing an upward trend. Below, you can see a daily chart from the end of last year’s December to today. During this period, SOL has increased more than 1,100%. 

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Throughout the year, there had been several price corrections. However, on October 15, 2023, along with Bitcoin and almost the entire market, a strong growth began. SOL’s value has spiked over 330% — from $22 to current $94, showing returns higher than many other cryptocurrencies. On December 22, the price even reached $99.5.

In comparison, since October 15, 2023, Bitcoin is up about 62% — from $26,852 to the current $43,500, and Ethereum is up about 48% from $1,554 to $2,300.

This all allowed SOL to overtake XRP in terms of capitalization and enter the top 5 cryptocurrencies on December 20. At the time of publication, Solana's capitalization is approximately $39.7 billion, and Ripple's is $33.4 billion.

Solana’s growing google searches and on-chain metrics

According to Google Trends, since mid-October, the interest in the search of "Solana" has been growing, hitting highs over the past year. This signifies the enthusiasm among the non-crypto audience.

According to TheBlock, the number of new addresses on Solana has been rising sharply since mid-November. The same with the number of active addresses 

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Other on-chain metrics, such as the daily number of NFT mints and total value locked (TVL), have also spiked, now standing at $2.182 billion.

Bitcoin is rising on speculation related to the approval of spot ETFs, pulling along the entire market. Solana’s growth, in its turn, is mostly related with developers' activity who attract the users’ attention, launching new tokens, announcing airdrops, and giving rewards.

Why Solana is in such demand: Jupiter, Jito, Pyth Network, and BONK airdrops

On November 15, the team behind the decentralised exchange (DEX) on Solana, Jupiter, announced an airdrop for old users who had made swaps of $1,000 or more by November 2, 2023. The rewards will be distributed with the token launch to 955,000 addresses in the first quarter of 2024.

Thus, addresses that fulfil the minimum requirements will receive 1,000 JUP tokens each, but their initial value is not yet known. The protocol also revealed plans to reward active users with JUP tokens in the future.

On December 4, Jito, the liquid-staking protocol (an analogue of Lido and Rocket Pool on Ethereum), announced an airdrop of 100 million JTO tokens for its users. 80 million coins were allocated for those simply staking some SOL. On December 7, JTO was listed by top exchanges, including Binance, Coinbase, and Kucoin. At the end of the first day, the price was $2.3.

Therefore, those 4,930 addresses that received the minimum drop of 4,941 tokens could earn about $5,600. Also, over the course of the year, the second part of their reward would gradually become available.

In addition to this, there were other airdrops that attracted attention to Solana. For example, the token PYTH of the Pyth Network project, which is a financial oracle network that publishes financial data from the "real world" to the blockchain. The BONK memecoin airdrop also impacted the activity within the Solana ecosystem and even beyond — the buzz surrounding BONK increased the demand for smartphones Saga developed by Solana.

Does Solana have a real potential on the market

Solana’s growing on-chain analytics has drawbacks: it is quite difficult to distinguish whether these are new users coming to Solana or they are just airdrop hunters active from different addresses to get more rewards.

Anyway, Solana is actually one of the fastest blockchains, and these technologies are attracting interest from large corporations and crypto projects.

In September, the payment giant Visa tested USDC payments on Solana. Moreover, MakerDAO, the issuer of the largest decentralised blockchain, DAI, stated that it is going to use the Solana codebase for the NewChain project. On December 18, Circle, the issuer of the USDC stablecoin, launched the euro-backed EURC stablecoin on Solana.

To summarise, Solana is in real demand among developers, regular users, and corporations in the world of traditional finance. Some see great promise in blockchain and the value of SOL. For example, at the end of October, investment firm VanEck published a forecast of 10,000% price growth by 2030.

We believe that such forecasts should be treated with caution, as should buying SOL at current levels. Solana has been updating annual maximums for several days in a row. There is no growth without corrections, so maybe it will come soon and it is worth waiting for it.

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Maria Kachura
Maria Kachura

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