Solana (SOL) has been ahead of the rest of the crypto market when it comes to earnings. The market had seen renewed interest after the holidays, leading to a bit of a rally here and there, especially for the big players, but Solana was able to buck the trend completely and post double-digit gains in recent days.
What is driving Solana's growth?
Despite being at the forefront of massive FUD that has dragged its price to two-year lows, Solana has now been able to recoup a fair amount of gains in recent days. while the comments from Ethereum founder Vitalik Buterin in support of the blockchain had helped, there was another factor pushing the price higher.
A new meme coin known as BONK appeared in the Solana ecosystem and after being airdropped to holders of major NFT projects, the price of the meme coin skyrocketed. The resulting gains would see investors FOMO into the cryptocurrency and since they needed to trade on the Solana network, the price of SOL had risen due to all the new attention it was getting.
In two days, SOL skyrocketed to become one of the hottest artists in the space as we kick off the new year. It is up more than 16% in the last 24 hours alone and the price of the digital asset has moved from losing territory to green over the last week. It now has nearly 37% gains for investors over this time period, according to data from Coinmarketcap.
Can SOL keep the profits?
Right now, the growth of SOL in the market is still largely driven by the FOMO triggered by the BONK meme coin. As the hype around this coin has strengthened, investor interest is expected to remain high, thus maintaining the growth trend recorded by Solana.
However, it is important to note that the BONK cryptocurrency is largely driven by hype and just like any other meme coin, this hype is expected to die down at some point. Now, once this happens, the decrease in interest would also significantly affect the price of SOL, dragging it lower. That is unless something else comes along that increases the price of SOL.
Profit-taking is also expected to begin, where investors will start dumping SOL to reclaim the gains already being seen. This will also contribute to a sell-off, and a downward correction would follow. But this correction is not expected to claim more than 10% of the current gains as the SOL price is now trading above its 20-day moving average of $12.3.
SOL is changing hands at $13.72 at the time of writing. It has surpassed Shiba Inu to become the 15th largest cryptocurrency with a market capitalization of $5.04 billion.
