Memecoin craze fuels Solana price rally — Is $180 SOL the next stop?
2024.10.18 17:47
Solana’s native token, SOL (SOL), gained 12.1% from Oct. 11 to Oct. 18 and data suggests that the upward momentum was partially driven by demand for memecoins. Increasing demand translates to higher network volumes, fees, and total value locked (TVL).
Traders are now debating whether the memecoin craze is sustainable and how SOL’s price can continue to benefit from the surge in network activity.
While there is no fundamental basis for the surging demand for memecoins, it is clear that influential social media accounts direct traders’ attention to the tokens. Take this Oct. 12 post from pwnlord69 as an example.
Source: pwnlord69
The memecoin Goatseus Maximus (GOAT) surged to a market value of $400 million within a week, fueled by rumors of launching an artificial intelligence bot. In reality, the bot merely promoted the GOAT token, which was launched using Pump.fun, a decentralized application that manages the technical aspects and liquidity provision for Solana tokens on the Raydium exchange.
Several other memecoins on the Solana network saw sharp price increases in October, with SPX6900 (SPX) up 379%, Apu Apustaja (APU) rising 170%, and FWOG gaining 134%. Notable gains above 90% were also recorded by PUPS and MAGA (TRUMP), according to Cryptorank.io data. As these memecoins gain value, they attract more attention from social networks and media, creating a positive feedback loop.
Solana network activity supports a higher SOL price
However, the key question is whether this movement significantly impacts SOL’s price, and how the network has performed compared to its competitors. A crucial metric for this analysis is total value locked (TVL), which measures the total funds deposited in the network’s smart contracts.
Solana TVL in SOL terms. Source: DefiLlama
Solana’s total deposits recently surged to a two-year high, nearing 41 million SOL, up 13% month-over-month. In comparison, Ethereum’s TVL remained flat at 17.7 million ETH (ETH), while BNB Chain’s TVL also stagnated at 7.9 million BNB (BNB). Highlights on Solana’s network include Raydium, which saw a 70% increase in deposits over the past 30 days, and Sanctum, which gained 32% in TVL.
Measuring deposits is important, but to truly gauge demand for SOL, one must analyze onchain activity. A decentralized exchange (DEX), for example, can record high volumes without necessarily having significant TVL. In this context, Solana’s impressive network activity recently secured its position as the leader, surpassing Ethereum over the past week.
Blockchains ranked by weekly DEX volumes. Source: DefiLlama
Solana’s 43% weekly growth in DEX volumes stands out among its direct competitors. Notably, even Ethereum’s layer-2 solutions, which benefit from lower transaction fees, couldn’t match Solana’s performance. Arbitrum, for instance, recorded $3.74 billion in weekly volume, still 64% below Solana’s $11.16 billion.
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While it’s difficult to predict whether the memecoin surge will persist, the data suggests that SOL reaching $180 is plausible, given the network’s competitive edge from its high validator capacity. Ultimately, Solana appears well-positioned to capture growth in areas like artificial intelligence infrastructure, Web3 applications, gaming, prediction markets, and more.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
