Solana Surges 9%, Vying for a Top 10 Spot Once Again

What happened

One of the most prominent cryptocurrencies that’s once again on watch today is Solana (SOL 10.07%). As of 2 p.m. ET, Solana has appreciated 9.5% over the past 24 hours, and is now within spitting distance once again of a top 10 spot in the crypto rankings by market capitalization.

So what

This move comes amid a strong move in the broader crypto market, as investors look to reprice digital currencies following an extremely volatile weekend.

Over the past week, Solana crashed from around $21 to as low as $16.12 on Friday, before recovering the vast majority of its losses over the past day. Currently trading around $20.50 per token, Solana has bounced approximately 27% off its monthly lows. This follows the collapse of three banks with ties to the crypto sector over the past week.

The Federal Deposit Insurance Corp. (FDIC) has stepped in to backstop depositors and appears to be doing everything it can to quell contagion-related concerns seen in the market, bolstering certain risk assets today.

Solana also has some token-specific catalysts investors are pricing in. The Solana ecosystem, along with Ethereum, are seeing impressive adoption from developers and users relative to other competing tokens. Experts continue to pound the table that these two Layer 1 networks are likely to see continued outperformance, as their network effects create a moat that entices additional activity, despite the current unfavorable macro backdrop.

Now what

Against the backdrop of so many market-driven concerns, investors appear to be racing toward quality right now. In the crypto world, Solana’s network effects and strong position in key areas of the market (such as non-fungible tokens, or NFTs) appear to be key factors driving positive price performance right now.

Today’s rally off of last week’s lows is certainly encouraging. That said, it’s likely that more volatility is on the horizon, given the unknown extent of any contagion risk in this space. 

The fact that three banks with ties to the crypto sector have effectively closed their doors since Wednesday could also hamper capital flows into this sector. Thus, while some asset repricing is certainly welcome from investors, I think now is the time to remain cautious. We simply don’t know what lies ahead.