Solana (SOL) Prices Rally to Their Highest in Over Three Years

The SOL token, which is the native digital asset of the high-performance Solana blockchain, approached $250.00, according to Coinbase data provided by TradingView.

Solana (CRYPTO: SOL) prices soared to their highest in more than three years Monday as bullish sentiment drove gains.

The SOL token approached $250, according to Coinbase data provided by TradingView.

At this point, the cryptocurrency was trading at its highest in more than three years, additional Coinbase figures showed.

What Happened: Alice Liu, head of research for CoinMarketCap, told Benzing Crypto that the SOL token's strong performance could be attributed to several factors.

“Solana was up 9.9% for the past 7 days, and was approaching $250 on the 18th November, marking its highest point in over three years. This rally can be attributed to several factors,” Liu said in emailed comments.

“First, the market is buzzing with anticipation as Solana nears its all-time high of $260 from November 7, 2021,” the research lead stated.

“As the price inches closer to this significant milestone, momentum is building, and traders are eager to see SOL break this record, fueling positive market sentiment. Open Interest for SOL has also been building up to a current high level of $5.61 billion, signifying a very active market.”

Liu also highlighted the booming meme coin market, which drove both Solana's popularity and trading volume.

“A large portion of this activity has been centered around Solana, driving both its popularity and trading volume. This surge in meme coin activity on the Solana network has further elevated interest and excitement surrounding SOL,” she added.

Solana's Market Position: Greg Magadini, director of derivatives for digital asset data provider Amberdata, commented on how the Solana network had carved out its own unique place in the crypto space.

“Solana is reaping rewards as an alternative smart-contract block chain to ETH,” he said in emailed comments.

“While ETH has a market cap +300% the size of Solana, ETH's prospects have structurally declined. ETH investors were promised ‘ultra sound money’ as transaction fees on the blockchain were set to burn partial supply with each transaction.”

If ETH burn exceeded the total proof-of-stake issuance rate, this would lead to a decline in the outstanding supply of ETH, hence a deflationary scheme, Magadini said.

“Today builders have built their protocols on ETH L2s and "settled" only periodic "state" to L1. This has drastically reduced the transaction fees on ETH (and subsequently the "burn" rate of ETH supply),” the analyst added.

“As ETH has become inflationary, developers and investors have grown frustrated with ETH and the twitter-verse has begun viewing ETH as a joke to be outcompeted by Solana. Investors speculate that SOL has a lot of upside relative to ETH performance, causing investors to sell ETH for SOL.”

This situation has helped fuel significant interest in the Solana platform and its digital token.

James Davies, CEO of derivatives trading platform Crypto Valley Exchange, told Benzing Crypto that this was evident in the capital flowing into the Solana ecosystem.

“Solana is on a tear right now, along with a lot of the top-tier of alt-coins,” Davies said.

“This often happens when Bitcoin (CRYPTO: BTC) has had a rally and capital is looking to continue the run. Bitcoin is the entry rails into crypto, and dozens of assets are now spiking as people move from BTC to a wider diversity of assets.”

Solana has processed a total transaction volume exceeding $160 billion in 2023, according to data from Footprint Analytics.

Solana price action soared more than 300% year-to-date.