Solana (SOL), the world’s eighth-largest cryptocurrency, reached an all-time high on Monday of $112.87 after strong demand from retail and institutional investors, pushing its market cap higher than $32 billion and raising fears that its 370-percent-plus price spike from its July 20 low of $21.96 means it’s excessively overvalued.
Solana (SOL) prices rose as traders speculated on what appeared to be a mysterious feature launch scheduled for Tuesday, Aug. 31, Coin Telegraph reported.
In terms of market cap, Solana now trails digital currency Dogecoin (DOGE), which is ranked No. 7 with a $36.3649 billion market cap.
Launched in 2020, Solana is a programmable blockchain (as opposed to the technology behind bitcoin, which is non-programmable). One of the fastest programmable blockchains in crypto right now, Solana’s tamper-proof, decentralized ledger records transactions and lets people transfer money without involving a third party such as a bank.
As a public blockchain, Solana relies on SOL to do two main things: staking and transaction fees. To record crypto transactions, the blockchain has to be updated and validated. Proof-of-work is the dominant blockchain validating protocol. Proof-of-stake is the emerging and faster-growing protocol. Both incentivize blockchain validation with rewards.
The Solana protocol burns a portion of the transaction fees it collects to keep the SOL supply limited against its 500,000,000 SOL issuance, Coin Telegraph reported. “Ignition” is thought to be an upcoming token burn event. Solana’s ignition teaser video on Aug. 27 featured a lighter shooting up a purple flame.
However, the ignition teaser caption reads, “The sky’s the limit. What will you launch?” with a period of Aug. 31 to Oct. 8, suggesting that it could be more of an event for decentralized application developers or nonfungible tokens (NFT) creators and less a token burning episode, Coin Telegraph reported.
On Friday, the day of the ignition announcement, the SOL/USD exchange rate jumped 17.62 percent and rose another 9.2 percent on Saturday.
Solana is now more valuable than leading digital currencies Polkadot (DOT), Litecoin (LTC), Uniswap (UNI), Bitcoin Cash (BCH) and Chainlink (LINK, among others, according to Coinmarketcap.
A competitor to Ethereum, Solana offers a flexible infrastructure and faster transaction settlement. It saw the largest inflows of any digital asset last week totaling $7.1 million, according to a weekly fund flows report published by CoinShares, Finance Magnate reported.
Solana made a successful foray into the NFT sector in mid-August, launching Degenerate Apes, which sold out 10,000 pictures of comic apes in eight minutes, earning 96,000 SOL (more than $5.9 million at that time).
On the flip side, Solana’s massive “price boom from its July 20 low of $21.96 has turned SOL excessively overvalued, as per its current relative strength index reading (near 81),” Yashua Gola wrote for Cointelegraph. “That amounted to a short-term correction in the sessions ahead.”
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