Solana prices rose today, seeing stronger gains than other major cryptocurrencies as the broader cryptocurrency market rose.
The value of SOL, which serves as the native token of the Solana network, rose to nearly $93.50 today, CoinMarketCap data shows.
At this point, it has risen more than 7% in less than 24 hours, after falling to $86.86 this morning, additional CoinMarketCap numbers revealed.
The performance of Bitcoin, the world's most prominent cryptocurrency, was more subdued, rising by as much as 5.8% during the same period. During this time frame, the digital asset surpassed $42,200 after falling to nearly $39,900 earlier in the day.
Joe Lee, founder and CEO of DefiDive, commented on the situation, providing some key context that may help explain the price movements of both SOL and Bitcoin.
Bitcoin market correction
He started by reviewing a major market event and assessing its impact on the two largest cryptocurrencies.
“Over the past week, we have been monitoring capital inflows and outflows from the Grayscale Bitcoin Trust (GBTC) Spot ETF,” Lee said.
“It was widely reported that on January 22, 2024, FTX liquidated 22 million shares with a market value at the time approaching $1 billion. This event caused a short-term correction in the market, as it fell from a high of $41,854.36 in the period,” he added. The previous 24 hours to a low of $38,677.59 after the reports emerged.
“GBTC is less than two weeks old, and shareholders have not yet had the opportunity to exit positions they may have acquired in previous years,” Lee noted.
“We expect continued volatility in the next couple of months as risk positions and capital allocations shift, especially given the closing of arbitrage positions that have been going on for years as GBTC becomes more liquid and trades at a premium of less than 0.5% to the spot price.”
Strong network activity
“Taking a closer look at Solana’s gains, we notice a similar pattern in the chart when analyzed against Bitcoin’s movements earlier in the week,” he noted.
“However, the total value locked indicates a rapid increase in stablecoin deposits and trading since the market bottom, rising from $1.932 billion to $2.253 billion within 4 days (as evidenced by DefiLlama data). This rise is attributed to the huge gains made by $SOL in the past three days, according to our analysis at DefiDive.
Trader opportunities
While Lee's explanation focused on the stronger activity on the Solana network, market expert Tim Enking offered a different perspective when explaining the altcoin's strong performance.
“Honestly, nothing fundamental has changed (as far as I know) for Solana,” said Enking, managing director of Digital Capital Management.
“They are simply traders trying to make money. Solana has been very volatile, and to some extent, volatility begets more volatility.
Disclosure: I own some Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.
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