Solana outperformed bitcoin and many other major cryptocurrencies today. 3d illustration.
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Solana prices rose today, seeing stronger gains than other major digital coins as the broader cryptocurrency market recovered.
SOL, which serves as the native token of the Solana network, rose to approximately $93.50 today. CoinMarketCap Data sample.
At this point, it had risen more than 7% in less than 24 hours, after falling to as low as $86.86 this morning, additional figures from CoinMarketCap reveal.
Bitcoin, the world's largest cryptocurrency, had a more moderate performance, rising as much as 5.8% during the same period. During this period, the digital asset surpassed $42,200 after falling to approximately $39,900 earlier in the day.
Joe Lee, founder and CEO of DefiDiveweighed in on the situation and offered background context that could help explain the price movements of both SOL and bitcoin.
Bitcoin market correction
It began by reviewing a major market event and assessing its impact on the larger of the two cryptocurrencies.
โOver the past week, we have been monitoring capital inflows and outflows from the Grayscale Bitcoin Trust Spot ETF (GBTC),โ Lee said.
โIt was widely reported that on January 22, 2024, the FTX estate liquidated 22 million shares with a market value at that time close to $1 billion. โThis event caused a short-term correction in the market, falling from a high of $41,854.36 in the previous 24-hour period to a low of $38,677.59 after the reports emerged,โ he added.
"GBTC is less than two weeks old and shareholders have not yet had the opportunity to exit positions they have acquired in previous years," Lee noted.
"We anticipate continued volatility over the next two months as risk positions and capital allocations change, particularly considering the closing of years-long arbitrage positions as GBTC becomes more liquid and trades at a lower premium. at 0.5% in cash".
Solid network activity
โLooking closer at Solana's gains, we see a similar chart pattern when analyzed with Bitcoin's moves earlier in the week,โ he noted.
โHowever, the total value locked indicates a rapid increase in deposits and trading of Stablecoins from the bottom of the market, rising from $1.932 billion to $2.253 billion in a span of 4 days (as evidenced by data from DefiLlama). This increase is attributed to the huge gains that $SOL experienced in the last 3 days, according to our analysis at DefiDive.
Business opportunities
While Lee's interpretation focused on stronger activity on the Solana network, market expert Tim Enneking offered a different view when explaining the altcoin's strong performance.
"Honestly, there is nothing fundamental (that I know of) that has changed for Solana," said Enneking, CEO of Digital capital management.
โThese are simply merchants trying to make money. Solana has been very volatile and, to some extent, volatility begets more volatility,โ she stated.
Disclosure: I have some bitcoins, bitcoin cash, litecoin, ether, EOS and SOL.
