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Solana Thrives on BONK Meme Coin Hype; SOL Price Approaches Crucial Hurdle

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Solana (SOL) suffered a peculiarly more significant price pullback than most rival alts for the majority of last year due to its substantial presence in the balance sheets of financially afflicted FTX and its affiliated entities. The token's recent market performance has, however, seemingly restored confidence among investors. A price recovery to double-digit territory fresh into the year wiped away the bulk of FTX contagion-inspired losses making token holders growingly convinced that the tides could be turning good.

The Solana native token has attracted tremendous interest from many market makers this week. The latest available data at press showed that only Ethereum ($174.798M) had logged a higher 24-hour net staking inflow than Solana's $97.14M.The ecosystem has also been logging fair SOL engaged balance figures close to the record high for the metric, as highlighted by the explorer tool Staking Rewards earlier today. The observation has been chalked up to a renewed ascent in the past few days after an unsettling slip below $10 at the end of last year.

Solana 7-day price chart. Source: Messari

A pertinacious decline following reports of sabotaging news in Solana's NFT niche pushed SOL price towards the single-digit territory, setting a multi-month low of $8.15 on Dec 29 as per CoinMarketCap data. Backing from the broader crypto community has since inspired an intermediate uptrend of the SOL/USD pair. Ethereum co-founder Vitalik Buterin was among the notable crypto figures who voiced his support for the ecosystem, amusingly once dubbed the ‘Ethereum killer,' in a tweet last Friday.

Dog-themed meme coin inspires SOL price gains

The newly launched Shiba Inu-copy Bonk project conducted a largescale airdrop, distributing 50% of its token supply to Solana creators, developers and NFT owners on Dec 25. The gradual uptake of the dog-themed coin has partially contributed to reviving interest in the Solana ecosystem. The BONK token has surpassed a milestone of 101,000 holders. Dune Analytics BONK statistics dashboard shows that more than 2.8 million transactions have been completed thus far. The SOL market has predictably seen swollen trading activity as sharp participants look to get involved.

Market data shows that SOL price has leapt by 36.95% in the last seven days and 58.74% from its trough. This positive rebound, after consecutive daily losses, has neutralized the previous week's negative returns whilst catapulting the SOL token into the top 20 in market capital rankings. At the same time, the fresh gains have meant liquidations for some traders.

Almost $15 million of short positions have been closed this week on account of this price improvement, according to liquidation data from Coinglass.

Solana liquidation data. Source: Coinglass

Solana (SOL) price closes in on the previous resistance zone

On the 30-day price chart, the latest recovery has helped push the SOL/USD pair closer to a decisive trading range above $14.70 that could either clear a path towards reclaiming mid-December  levels or lead to a mild correction towards the $10 psychological support.

SOL/USD marked price chart. Source: TradingView

There are reasonable concerns that the price of Solana could resume a downtrend once the hype around the BONK token fades. Further supporting this well-grounded projection is the blatant lack of utility of the meme coin and the absence of promising underlying tech. This ultimately means that traders could settle for a quick exit, lowering prices below the immediate resistance range of around $14.80.

Solana executive assures network activity is still bright

In separate Tuesday remarks to CoinDesk TV, Solana Foundation's Austin Federa, assured that recent damaging developments have not affected the network's activity. The Solana executive noted that developers have continued building their projects on the blockchain. Users, too, have not shied away from the ecosystem as reflected in on-chain activity metrics.

To learn more about Solana, visit our Investing in Solana guide.

Price movements in the rest of the crypto market

Bitcoin and Ethereum have maintained their fair-to-middling action, retaining the sector-wide green trading theme for the day. The total market capital has clawed up to $817 billion from slightly over $800 billion on Monday. Ethereum Classic (ETC) leads the top gainers, having printed a 20.5% 24-hr green candle at press time. NEAR Protocol's NEAR is trading at similar profit margins, up 18.31% in the same period, followed by Lido DAO (LDO) and EthereumPoW (ETHW), which have all recorded double-digit gains today. OKB exchange token (OKB) and HTX token (HT) – now a correction path – have fallen among Wednesday's biggest losers.

 

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.