So much so, the blockchain became the top-performing major cryptocurrency over the past week. This latest price surge solidifies Solana's impressive performance in November, when it broke past the $50 threshold for the first time since the May 2022 crash.
Currently trading at around $59.79, Solana's native token SOL has surged 7% over the last 24 hours and 10% over the past 7 days. This price growth outpaces all other top 20 cryptocurrencies and signals renewed interest in this unique blockchain network.
Understanding Solana's November Price Rally
Solana experienced substantial gains in November 2022, defying the ongoing Crypto Winter by surpassing the $50 mark. This was an important psychological threshold for SOL, which had crashed below this level alongside the broader crypto market selloff in May 2022.
At one point during mid-November, Solana even managed to reach a local high of around $63. While it has pulled back slightly from those levels, SOL continues exhibiting exceptional resilience. Its current $59 price point demonstrates consistent strength even after last month's temporary cooldown.
What Fueled the Recent SOL Price Surge?
Industry analysts have highlighted two likely catalysts behind Solana's latest demonstration of upward price momentum:
1. Short Squeeze
In October 2022, rumors circulated that FTX (which went bankrupt shortly after) was preparing to sell its substantial SOL reserves. This news turned Solana into the most oversold major crypto asset, with traders betting aggressively against further price rises.
However, the selling pressure never materialized. Instead, a short squeeze occurred in November when bearish traders rushed to close out short positions all at once. This self-perpetuating dynamic propelled SOL 70% higher within just 30 days.
2. Renewed Institutional Investment
Beyond the technical short squeeze, fundamental interest in Solana among institutional crypto investors seems to be reviving.
Development activity remains robust, with 40% annualized growth in Solana developers. The network also enjoys loyal support among communities of retail SOL enthusiasts.
Ongoing Debate: Solana vs. Ethereum
In fact, comparison debates between Solana and Ethereum now feature prominently within crypto social media circles.
Bullish arguments in favor of Solana include:
- Transaction Speed: Solana currently processes over 60,000 transactions per second, far outpacing Ethereum's 15 transactions per second.
- Low Fees: Average transaction fees on Solana stand below $0.01, much cheaper than Ethereum's average fees of $2 to $10.
Key Factors Supporting Ongoing Price Strength
Assuming broader crypto markets stabilize in 2023 rather than entering a further winter decline, several signs point to Solana maintaining competitive strength next year.
- Developer Growth Continues: Figures show Solana's developer ranks are expanding 40% annually despite market volatility, indicating robust platform functionality.
With fundamental and technical factors once again aligning favorably, analysts speculate Solana's price has ample room left to rally over the coming year. However, cryptocurrencies remain highly volatile. Investors should use prudent position sizing and risk management strategies before buying SOL or any other digital asset.