The SOL price rally also appeared in the wake of “Ignition,” a global hackathon to build new platforms on the Solana blockchain.
The SOL/USD exchange rate reached $146.28 for the first time in history, following a 35% month-to-date rally. The huge upside move lifted the pair’s returns for the year above 7,500%, taking Solana’s market capitalization over $41 billion to make it the seventh-most valuable project in the cryptocurrency space.
Solana’s run-up to record highs also brought overvaluation risks in focus, with a classic momentum indicator, the relative strength index (RSI), returning an overbought reading for the cryptocurrency. Above 70, the RSI suggested that SOL/USD could undergo a sell-off in the coming sessions and that opening a long position on the pair could prove risky.
But analysts noted that it is hard to call the Solana top just yet. An independent market analyst, known by the pseudonym The Crypto Dog, advised speculators to just let Solana ride and see where it goes with its current strength.
Yuriy Mazur, head of data analytics at cryptocurrency exchange CEX.IO, anticipates that SOL/USD rates will cross above $150 in the coming sessions. But he, too, noted that the pair had entered a “price discovery” stage, and its upcoming bias relies on how well Solana emerges in the DeFi and the NFT space.
“The price of Solana (SOL) is on the uptrend as the blockchain is currently showcasing its potentials in serving as a viable alternative hub for all things Decentralized Finance and Nonfungible Tokens,” Mazur told Cointelegraph via email.
“The growth of Solana to $146.28 is steered positively by the increasing demand for the tokens for use in minting thousands of NFTs being launched on the Solana blockchain.”
On most NFT and DeFi platforms, users pay for the transaction costs required to process and validate transactions on the blockchain. The so-called gas fees change as per the network. Ethereum hosts most NFT and DeFi projects via smart contracts supporting its native token Ether (ETH), though this is also why the network suffers from excessive fee issues.
Mazur said investors now consider Solana a potential long-term rival to Ethereum, especially when providing lower gas fees and higher scalability. He cited Audius, a blockchain-enabled music streaming platform that integrated Solana to support its NFT project.
“Solana is still proving itself to be a resilient and a better alternative to Ethereum,” the analyst explained.
“It has a long way to go in terms of becoming a major DeFi and NFT infrastructure [...] However, to sustain its growth, better upgrades and features must be unveiled to beat competition from other blockchains, including Cardano and Ethereum.”
Mysterious event revealed as a hackathon
More bullish backstops for Solana appeared following its global hackathon launch, dubbed as Ignition, on Tuesday, which will run until Oct. 8. The contest attempts to draw talent and ideas to the Solana public blockchain to drive growth and innovation.
Ignition will distribute over $5 million worth of rewards and seed funding, including prizes from event sponsors, such as Microsoft, Jump Capital and Standard Chartered. Mango Markets, the leading Solana-based decentralized exchange and the winner of one of the recent hackathons, will also add $30,000 to the prize reserves.
Speculators earlier misidentified Ignition as a SOL burning event, which helped to send SOL prices above $100 for the first time in history on Monday.
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