Solana’s sol token rallied today, climbing as the digital currency benefited from a broader recovery in cryptocurrencies.
The digital token, which is the native cryptocurrency of the Solana blockchain network, reached $219.96 around 12:40 p.m. ET, Messari data reveals.
At this point, the cryptocurrency was up nearly 18% from its recent low of $186.75 that it reached yesterday on Messari.
The sol token experienced these gains after bitcoin bounced off support above $55,000 and many altcoins (cryptocurrencies other than bitcoin) followed the world’s most prominent digital currency higher, CoinMarketCap figures show.
At the time of this report, sol was up more over the last 24 hours than any of the other top 10 digital currencies on CoinMarketCap, as ranked by total market value.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining these recent price movements, analysts highlighted a handful of variables.
“Solana’s bounce can be explained on account of two factors,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.
He emphasized bitcoin’s recent strength, and how it has served as a boon to the sentiment of investors.
“Firstly, Bitcoin’s bounce from support around $55,500 has given the market renewed confidence and nearly all alts have risen since then,” said DiPasquale.
“Secondly, in instances like this, the market tends to favor coins that showed strength prior to the price drop,” he stated.
“In this case, Solana has been one of the biggest performers this year and has had a solid run. So it is natural for it to have a strong bounce any time the market starts looking positive.”
The digital currency has experienced some very impressive gains in 2021, being up more than 13,000 year-to-date at the time of this writing.
When clarifying the sol token’s most recent price movements, Andrew Rossow, an internet and technology attorney, offered a similar take to that of DiPasquale.
“Bitcoin’s bounce back will almost invariably provide the market with that small percentage of confidence lost in any small dip,” he stated.
“However, because of the growth and increase of altcoins during that same time period, it only adds that necessary enforcement and support needed for market participants to have that continued faith in Bitcoin’s pricing,” said Rossow.
Further, he shed some light on why sol, in particular, rallied lately.
“The market will always favor coins that have shown just enough strength prior to any price drop,” Rossow noted.
“In this case, due to Solana’s prior history of success and stability, there is still a large percentage of the market that has that confidence and faith, so in the event there is a slight market drop, it’s not too much of a concern due to that expectation it would quickly redirect to positive growth.”
Solana’s High Bandwidth
In a crowded field of projects, Solana has managed to stand out for its ability to process a large number of transactions.
While the blockchain network has generated significant visibility for this high throughput, it became overwhelmed in mid-September and went offline for 17 hours after it became inundated with hundreds of thousands of transactions.
Fortunately, members of the community worked together to create a solution, which was then implemented by validator nodes to get the network functional once again.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.