Derivatives data shows institutional demand remains strong for SOL, and on-chain data points to a rally to $250.
The price of Solana’s SOL coin is meeting resistance near its all-time high again, but solid fundamentals and the impressive growth of its decentralized finance (DeFi) and nonfungible token (NFT) ecosystem are likely to drive the altcoin above $250 before year-end.
Institutional investor interest is likely a key factor behind SOL’s impressive 490% gain since August. For example, SOL is the fourth-largest Bitwise 10 Crypto Index Fund component, which overall is a $1.3 billion over-the-counter tradable market instrument.
DeFi is gaining traction
Solana’s two most prominent decentralized finance projects are decentralized exchanges with built-in yield generation programs, and they hold nearly $2 billion in total locked value each.
Saber is an automated market maker protocol that trades between stable pairs and synthetic assets and provides yields for the platform’s liquidity providers. Meanwhile, Raydium offers a decentralized exchange, yield farming and liquidity pools.
Evidence of institutional investors’ appetite for Solana was the $12-million weekly inflow in mid-October, as reported by CoinShares recently. In the same week, the United States registered branch of exchange FTX announced support for the Solana blockchain, enabling users to trade, deposit and withdraw NFTs that conform to the Metaplex token standard.
SOL futures open interest reached a record-high
This positive newsflow has been reflected on SOL’s derivatives markets, as depicted by the aggregate futures open interest data below:
The indicator reached a record-high $1.86 billion on Oct. 25, which is a 123% increase in 30 days. To put things in perspective, Cardano’s ADA and Polkadot’s DOT currently hold a $900-million futures open interest.
Traders should acknowledge that this event is not necessarily positive, as futures contracts require both a buyer (long) and a seller (short). Nevertheless, this increasing interest allows even more substantial players to participate.
Another positive factor is that DeFi protocols maintain a $13.5 billion total value locked (TVL), even though the sector took a substantial hit after the 17-hour network outage during Sept. 14 and 15.
The Solana Foundation stated that bots spammed the network as Grape launched its initial DEX offering on the Solana-based decentralized exchange Raydium. That activity overwhelmed the processing capacity with a transaction load of 400,000 per second, requiring a coordinated hard fork by validators to ignore the spam requests.
$250 seems closer than ever for SOL
VORTECS™ data from Cointelegraph Markets Pro also began to detect a bullish outlook for SOL on Oct. 20, nearly 24 hours ahead of the 15% pump that led to $210.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
Data illustrates that the current number of tweets from unique accounts discussing Solana is 32% higher than the 30-day average. Tweet volume is one component of the VORTECS™ Score, which identified bullish conditions for SOL on Oct. 20.
As long as Solana’s ecosystem expands, the network remains a viable solution for DeFi and NFT applications looking for cheap, fast transactions. Both on-chain and derivatives indicators signal that $250 SOL by year-end is totally feasible.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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