Solana Prices Rallied Today, Outperforming The Crypto Markets. What Drove These Gains?

Solana prices pushed higher today, experiencing more robust gains than other major digital currencies as the broader cryptocurrency market rallied.

SOL, which serves as the native token of the Solana network, climbed to roughly $93.50 today, CoinMarketCap data shows.

At this point, it was up more than 7% in less than 24 hours, after falling to as little as $86.86 this morning, additional CoinMarketCap figures reveal.

Bitcoin, the world’s most prominent cryptocurrency, had a more muted performance, rising as much as 5.8% during the same period. During this time frame, the digital asset surpassed $42,200 after declining to roughly $39,900 earlier in the day.

Joe Lee, Founder and CEO of DefiDive, weighed in on the situation, offering some background context that might help explain the price movements of both SOL and bitcoin.


Bitcoin Market Correction

He started off by reviewing a major market event and evaluating its impact on the larger of the two cryptocurrencies.

“Over the past week, we have been monitoring the capital inflows and outflows of the Grayscale Bitcoin Trust (GBTC) Spot ETF,” said Lee.

“It was widely reported that on January 22, 2024, the FTX estate liquidated 22 million shares with a market value at the time close to $1 billion. This event caused a short-term correction in the market, dropping from a high of $41,854.36 in the previous 24-hour period to a low of $38,677.59 after the reports emerged,” he added.


“GBTC is less than two weeks old, and shareholders have not yet had the opportunity to exit positions they may have acquired in preceding years,” Lee noted.

“We anticipate continued volatility in the next two months as risk positions and capital allocations shift, particularly considering the closure of years-long arbitrage positions as GBTC becomes more liquid and trades at a sub-0.5% premium to spot.”

“Taking a closer look at Solana's gains, we observe a similar chart pattern when analyzed against Bitcoin's movements earlier in the week,” he observed.

“However, Total Value Locked indicates a rapid increase in Stablecoin deposits and trading since the market bottom, rising from $1.932 billion to $2.253 billion within a span of 4 days (as evidenced by data on DefiLlama). This surge is attributed to the outsized gains $SOL experienced in the last 3 days, according to our analysis at DefiDive.”

While Lee’s interpretation focused on the stronger activity on the Solana network, market expert Tim Enneking offered a different view when explaining the robust performance of the altcoin.


“Honestly, there’s nothing fundamental (that I know of) that changed for Solana,” said Enneking, managing director of Digital Capital Management.

“It’s simply traders trying to make money. Solana has been very volatile and, to some degree, volatility begets more volatility,” he stated.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.

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