Solana open interest hits record high: Will SOL top $200?
2024.11.07 14:22
Solana’s native token SOL (SOL) surged 22.5% between Nov. 5 and Nov. 7, reaching its highest level in seven months. This rally mirrored broader altcoin gains, which rose by 17% as Bitcoin (BTC) reached a new all-time high on Nov. 7.
A significant portion of the bullish momentum can be attributed to President-elect Donald Trump’s victory in the United States presidential election and the Republican party securing majority control of the Senate, which suggests the potential for more innovation-friendly regulations in the cryptocurrency sector.
SOL’s rising demand was accompanied by a jump in leveraged positions, with aggregate open interest for Solana futures reaching an all-time high on Nov. 7. Despite the higher risk of forced liquidations in the event of a SOL price correction, derivatives data points to further upside potential.
Solana futures aggregate open interest, SOL. Source: CoinGlass
SOL futures open interest surged to 21.1 million SOL on Nov. 7, an 11% increase from the previous week and a new high in nominal terms, reaching $4 billion. This reflects a strong adoption of SOL derivatives, suggesting rising institutional interest but also introducing potential risks.
Large futures positions can be monitored, which may lead to whales becoming targets for entities looking to profit from short-term market volatility. In derivatives markets, however, long and short positions are always balanced, meaning the funding rate offers a window into which side is seeking more leverage.
Solana 8-hour average funding rate. Source: CoinGlass
Currently, the 8-hour SOL funding rate stands at 0.017%, equating to roughly 1.5% monthly—indicative of a neutral-to-bullish sentiment. Typically, during periods of heightened market excitement, the leverage cost for longs can rise to 2.1% or more, so the current rate suggests moderate optimism, potentially supporting further upward momentum.
Strong onchain metrics support continued price growth for SOL
Some analysts argue that SOL’s recent price gains were largely driven by a surge in memecoins. Platforms like the Pump.fun token launch and the Raydium decentralized exchange (DEX) saw significant boosts from the memecoin frenzy. However, broader developments within the Solana ecosystem could propel SOL’s price to $200 and higher.
Source: CatfishFishy
Critics, such as ‘CatfishFishy’, highlight the potential for “pump and dump” schemes orchestrated by “insiders”—a small group of affluent investors who control a large portion of the supply and leverage influencers and paid endorsements. The post also notes that part of the TikTok audience is underage, raising concerns about potential regulatory scrutiny.
Related: Election delivers big win for crypto, economic freedom — Coinbase CEO
The speculation that memecoins are the primary driver behind SOL’s rise to $194 overlooks key factors, such as Solana’s total value locked (TVL), which reached $6.64 billion on Nov. 7, a 22% increase from the prior month, according to DefiLlama data. Significant gains were seen in sectors like liquid staking, perpetual futures, leverage and lending, and others beyond memecoins.
As long as onchain metrics remain robust and SOL derivatives show no signs of excessive fear or greed, the Solana network’s competitive advantage—offering fast and relatively low-cost transactions—will continue to provide “free marketing” and capture a significant share of users driven by Bitcoin’s all-time high.
Overall, there are no indications of weakness, suggesting a clear path for even higher SOL prices.
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.
