After tripling in value in a month, the price of Solana token SOL rose a further 40 percent in 24 hours to reach a record high of $195.70 Tuesday, hopping ahead of XRP and Dogecoin. SOL rose to take its place as the No. 6 most valuable cryptocurrency by market capitalization.
Meanwhile, shares of Bitcoin and other cryptos fell 15-to-30 percent on one of the most volatile trading days this year. Bitcoin fell from the psychological $50,000 level to less than $43,000 within minutes on the same day that El Salvador made BTC legal tender.
Solana’s fortunes are driven by the growing popularity of its blockchain, which can host non-fungible tokens and decentralized finance applications such as smart contracts, Business Insider reported. Non-fungible tokens (NFTs) are unique tokens on the blockchain that are tied to assets such as artwork, videos and documents that cannot be exchanged like-for-like, as a cryptocurrency is. Smart contracts are key to decentralized finance (DeFi). Their code allows two parties to exchange money or goods without a centralized party such as a bank or broker.
Solana’s market capitalization, at $51.547 billion, is outranked only by five other coins: No. 1 crypto Bitcoin ($883 billion), Ethereum ($407 billion), Cardano ($76 billion), Binance ($71 billion) and Tether ($67 billion), according to Coinmarketcap.
Ahead of Tuesday’s Solana run, The Moguldom Nation founder Jamarlin Martin predicted on Aug. 30 that SOL would rise above XRP, Dogecoin and Cardano.
“There is going to be some smart people with big wallets who say ‘no way SOL should be below XRP, DOGE, and Cardano projects based on the underlying tech and fundamentals.’ They are likely going to PUMP SOL into a #3 market cap. $SOL”
The four top-ranked cryptos — Bitcoin, Ethereum, Cardano and Binance Coin — all showed 24-hour losses respectively of 9.62 percent (BTC), 12.68 percent (ETH), 17.05 percent (ADA) and 15.30 percent (BNB). XRP was down 21.21 percent and Dogecoin was down 18.15 percent.
High volatility in the high-risk crypto market means liquidations are common. These happen when a trader has insufficient funds to keep a leveraged trade open, Coindesk reported. That volatility presents the opportunity for investors to profit enormously compared to traditional asset classes such as commodities or stocks. In 2020, Year 1 of the coronavirus pandemic0, Bitcoin ended the year up 160 percent compared to gold, up 22 percent, and the S&P 500, up14 percent.
Analyst and trader Scott Melker, known as “The Wolf of All Streets,” blamed Bitcoin’s loss on large-volume traders.
“Leave it to whales to dump Bitcoin on the day that El Salvador makes it legal tender,” Melker tweeted.
The DeFi and NFT marketplaces built on Solana’s network cater to the needs of both retail and institutional investors and SOL has become attractive to both classes, said Greg Waisman, co-founder and chief operating officer at the global payment network Mercuryo.
“It is a known fact that every cryptocurrency has its season, and we can notably say that this is Solana’s reign to outpace the rest of the market,” Waisman said.
Investors have been on a frenzied altcoin-buying spree in recent weeks, pushing some to multi-month highs on Monday, Business Insider reported.
JPMorgan warned that the huge gains in some of the smaller Bitcoin and Ethereum rivals could be a sign of an overheating crypto market.
“Retail investors propelled ‘altcoins’ in August making cryptocurrency markets look frothy again,” said JP Morgan cross-asset research analyst Nikolaos Panigirtzoglou in a note last week.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
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