Solana, boosted by move into NFTs, enters list of top 10 cryptocurrencies by market cap

Solana’s SOL token is now one of the biggest cryptocurrencies by market value, thanks to growing institutional interest and the boom in non-fungible tokens (NFTs) and decentralized finance (DeFi).

At the going price of $93, the token’s market capitalization stands at $26.86 billion, or the ninth-largest in the crypto markets and ahead of polkadot’s $25.7 billion, per data source Messari. The cryptocurrency’s price hit a record high of $96 early today and has more than doubled since Aug. 15.

“Institutional demand for SOL has increased in recent weeks,” crypto financial services firm Amber Group said in a Telegram chat with CoinDesk. On Tuesday, Osprey Funds registered the Osprey Solana Trust with the U.S. securities regulators in a bid to give wealthy investors access to the SOL token.

“Generally speaking, money has been flowing into Ethereum alternatives like Solana, Cosmos, Luna, and Avalanche,” Amber Group said. The tokens of these smart contract platforms have each rallied by more than 80% against Ethereum’s native coin ether over the past four weeks.

SOL picked up a strong bid two weeks ago after Solana forayed into the booming NFT space with the launch of Degenerate Ape Academy. It was a smash-hit debut, with a collection of 10,000 unique pictures of cartoon apes sold in the first ten minutes. That drove SOL higher as people needed to buy the cryptocurrency to purchase apes.

“Once people bought SOL and experienced the speed and low transaction costs for themselves, they got more bullish,” Packy McCormick, the author of the Not Boring newsletter, noted in a recent essay titled Solana Summer.

Other developments such as real-time data feeder Pyth Network’s debut on Solana’s blockchain may have added to the token’s positive momentum.

A continued boom in NFT could bring more gains for SOL. According to Amber Group, the theory of reflexivity or positive feedback loop appears to play in the NFT market. “There is a supply crisis and opacity of price discovery. So price bands are wide, and gap up appears to be the trend for now,” Amber Group said.

From a technical analysis standpoint, the path of least resistance for SOL is on the higher side, according to Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency research company, said. “The next upside targets are $89 [already flipped into support] and $145,” Noble told CoinDesk on Friday. “This is, of course, contingent on the overall market staying positive.” ($145 is the 161.8% Fibonacci extension level.)

“Aside from a crash in the market, I don’t think anything is going to stop this coin,” Noble said. “Solana is probably going to be a big platform for both DeFi and NFTs.”

Katie Stockton, founder, and managing partner at Fairlead Strategies told CoinDesk in an email that charts show no signs of uptrend exhaustion, and further gains could be in the making.

SOL's daily chart

The cryptocurrency’s sharp rise from $70 to over $90 seen over the past two days has confirmed an upside breakout from a consolidation pattern. Per Stockton, the breakout has opened the doors for a long-term target near $126.

A bearish reversal would be confirmed if SOL prints two daily UTC closes below $70. “That might create a move back to the old high at $58,” Noble said.