Today’s price surge in Solana (SOL) is a result of the cryptocurrency market’s strong recovery after its most bearish week since June 2023. The rebound comes after Iran’s drone attack on Israel over the weekend, which initially caused a market downturn.
However, with a recent network upgrade on the SOL blockchain and the approval of spot Bitcoin and Ether ETFs by the Hong Kong regulatory body, Solana’s price has gained buying dominance and is poised to climb higher.
Factors Contributing to Solana Revival
Several key factors are contributing to Solana’s and the broader crypto market’s upward momentum. The recent green light for spot Bitcoin ETF products in Hong Kong and the rising buying demand ahead of the imminent Bitcoin halving in April have bolstered investor confidence.
The altcoin market has surged by 30.5% following regulatory approvals for nine-spot Bitcoin ETFs in the United States on January 11, reflecting traders’ belief that these approvals could attract institutional investors and pave the way for ETF approvals for other cryptocurrencies, including Solana.
Additionally, Solana’s gains today came on the heels of an update focused on addressing the network’s existing congestion problems. In March, the SOL blockchain experienced a 75% transaction failure due to increased meme coin launches and user activity, with transaction volumes surging to $4 billion, far exceeding the daily averages of $500 million in 2023.
Version 1.17.31, launched today, is the first of planned updates to tackle Solana’s network congestion. As a result, Solana-based meme coins such as WIF, BONK, and MEW have experienced significant price increases over the past 24 hours.
Despite the price surge, Solana’s on-chain metrics remain in the bearish region. Solana’s total fees have been declining, recently reaching $1 million. Moreover, the total value moved on-chain faced a decline of $3 billion as open interest in the SOL network continued to decrease last week.
These indicators suggest that while the price is rising, underlying network activity and investor interest may not be as robust as the price action implies.
