Solana price hits a new 2023 high — What’s behind the SOL rally?
Solana (SOL) reached its highest price point since May 2022, likely propelled by an increase in DApp usage and several other pivotal factors.
investograph 
Solana's native token, SOL, observed a remarkable 22% surge on November 10, propelling it beyond the $54 threshold for the first time since May 2022. Notably, this spike occurred despite the ongoing sale of SOL tokens by FTX's bankruptcy estate, approved by the Delaware Bankruptcy Court in September 2023.
The community's enthusiasm stems from the realization that some of the tokens from the bankruptcy proceedings are either vested or locked, and there exists a weekly sale limit of $100 million. The impact of these sales has been less severe than initially anticipated, shifting concerns over asset liquidation to hopeful expectations of reduced selling pressure, as accurately pointed out by trader and independent analyst Bluntz.
SOL's price surge is fueled by increased demand for leverage longs, boosting its futures open interest to $745 million, the highest level since November 2021 when SOL reached its all-time high. In the futures market, a positive funding rate indicates the demand for longs seeking leverage, a shift from the recent period when leverage shorts dominated funding rates.
While derivatives markets have contributed to SOL's rally, the ecosystem's health displays signs of growth, seen in the increasing total value locked (TVL) in Solana's smart contracts and the rising number of decentralized application (DApp) deposits.
Solana's TVL, which measures the amount locked in its smart contracts, has seen a reversal in its declining trend, signaling a turnaround after a series of declines. Similarly, DApp deposits have surged by 10% in the past three days, indicating a potential recovery from the aftermath of the FTX exchange bankruptcy.
Analyzing active addresses in DeFi reveals Solana's rise as the fourth-largest blockchain in TVL, accompanied by a 28% surge in the number of active addresses. This growth is in contrast to the decline experienced by competitors, notably Ethereum.
Despite the surge in network activity and TVL, the market capitalization of Solana, currently at $22.8 billion, surpasses Polygon's by almost threefold, raising questions about the sustainability of SOL's bullish trend above $54.
The protocol's accumulated 30-day fees stand at $1.9 million, compared to Polygon's $1.6 million, but lag behind BNB Chain's $9.1 million, underlining the valuation concerns post-SOL's rally.
At present, while there are no signs of excessive leverage demand in SOL derivatives contracts, the fundamentals suggest a restrained upside despite the ongoing upward trend.
