The digital currency market is a dynamic place which has been experiencing exciting developments lately. In particular, the price of Solana (SOL) has experienced an upswing. Three reasons have been identified to explain this bull run.
To start, the recovery of SOL was witnessed after the clearance of $1.3 billion in SOL by a U.S. bankruptcy court, following the collapse of a well-known digital exchange, FTX. Notwithstanding the initial shock resulting from the court’s decision, which saw SOL price drop to a 2-month low of $17.34 on Sept. 11, the cryptocurrency demonstrated resilience by bouncing back and re-establishing the $20 support on Sept. 29.
Another factor contributing to SOL’s upswing is the surge in the usage of decentralized applications (Dapps) built on the Solana network, along with an increase in nonfungible token (NFT) volumes. Record indicates that the engagement with Dapps on Solana in a given period surpasses that of Ethereum, backed by data from DappRadar. Furthermore, Solana’s ability to offer a cost-effective solution for NFTs, storing data off-chain, allows creators to produce in larger quantities and reach wider audiences which has not gone unnoticed by investors.
Lastly, the network upgrade to version 1.16 implemented on Sept. 28, has also contributed to SOL’s price rise. This upgrade integrated a “gate system” to gradually activate new features, keeping the network stable and reducing the negative impact of abrupt changes.
On the other hand, it is important to note, while Solana shows growth and remains competitive in the market, Ethereum layer-2 solutions are presently gaining more traction in terms of total value locked (TVL) and activity, which makes the $23 resistance a challenging milestone for Solana to cross. While Solana remains a major player in the blockchain industry, developments within and outside the ecosystem will largely influence how its future unfolds.
Whether or not these three reasons will continually drive SOL’s price upwards or whether the cryptocurrency can overcome additional hurdles such as stiff competition from other blockchain networks will be closely observed by investors and blockchain enthusiasts alike for the next few weeks/months.
In conclusion, while the outlook for Solana looks promising, as seen in its recent developments, internal and external factors could affect its rally, a factor potential investors should be aware of.
Source: Cointelegraph
