The SOL token faced strong resistance at $102 on January 17th, leading to a 23% drop to a five-week low of $78.60 on January 23rd. However, within 24 hours, SOL rebounded by 10%, putting a temporary stop to the bearish trend. Traders are now questioning whether this recovery is supported by strong fundamentals and if SOL can surpass the $90 mark.
One factor contributing to this movement is the recent introduction of “token extensions” on the Solana network. These extensions enable private transfers to conceal balances, transfer hooks for restricted access, and the ability to charge fees at the protocol level. These updates were included in the v.1.17 release of the Solana Labs validator client on January 19th. These plug-and-play functionalities are designed for enterprise applications and compliance-friendly resources.
Another reason for optimism is the development of Firedancer, a new third-party validator client by Jump Crypto. This solution aims to enhance Solana’s processing capabilities to millions of transactions per second and support parallel processing (sharding).
A post on the X social network by user R89 highlights the improved network stability of Solana compared to its competitors, who experienced outages in 2022.
In December 2023, the first wave of successful Solana SPL token airdrops reached centralized exchanges, including Jito’s JTO staking solution and the BONK memecoin. This triggered a demand for SOL tokens as users rushed to participate in these airdrops, both confirmed and speculative.
A search on social networks reveals the intense interest among investors in Solana airdrops. While it’s uncertain how many of these leads will materialize, the speculation alone boosts demand for SOL tokens and increases Solana network activity.
Solana’s primary decentralized application (DApp) metric showed strength in January, with the network’s total value locked (TVL) reaching 15.3 million SOL. Despite a 28% decline in SOL’s price over the past 30 days, the amount deposited in its smart contracts is nearing a three-month high.
Although the Solana network has experienced significant growth in transaction activity and volumes, it still trails behind Ethereum and BNB Smart Chain in terms of absolute numbers. However, Solana witnessed a 6% transaction growth and a 12% increase in active DApp users in the last seven days, while Ethereum remained relatively flat, and BNB Chain and Polygon experienced declines.
Noteworthy Solana DApps include Jupiter Exchange with 387,780 active addresses in seven days and Raydium with 190,650 users. In comparison, PancakeSwap, the leading BNB Smart Chain decentralized finance application, had 263,010 active addresses, and Ethereum’s Uniswap had 64,890.
While it’s unclear if the recent bounce in SOL’s price at $80 is solely due to the increased demand for airdrops and the introduction of token extensions, the strong demand seen in Solana network DApp activity provides some confidence that reaching $90 and beyond is possible.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.