What are the reasons behind the sudden upsurge of Solana?

One of the most basic yet significant features of the crypto market is its volatility. The highly volatile market can produce massive gains one day, and still, it might crash the very next day.

The extremist attitude of the cryptocurrency industry is what makes it different from the other financial sectors in the world. This volatility provides traders and investors with a great opportunity to amass hefty profits in no time.

While all that glitter may seem magical, it is not gold since losses are just as probable as profits. This is why risk management is one of the most critical and useful skills to accumulate while meddling in the digital currency sector.

The growth story of crypto as a concept is undeniably massive. There is no such example of any concept having such a significant influence within a decade or so in the history of global finance and economics.

However, the crypto industry still has a long way to go. Over the years, many crypto projects rose to fame because of their profit potential, sudden price hike, and even strong fundamentals.

Who is not familiar with the names of Bitcoin and Ethereum? Even the ones who are not interested in cryptocurrencies know about these two projects.

Nonetheless, as the crypto community grows with every passing day, traders and investors are developing a liking for new projects. The rise of Solana (SOL) in the last few days is evidence of this phenomenon.

SOL went up by a staggering 70 percent in one week

As the market developed a bullish outlook throughout August and even at the start of September, we saw that several crypto projects pushed above their weight, and rose to fame with their massive upsurges.

Cardano (ADA) and Solana (SOL) remained the top gainers of this phase, as the former crossed the crucial $3 mark, and the latter touched a high of $145.

Solana has set new records, as it continues to grow, and is now valued as the seventh-largest cryptocurrency in terms of market capitalization.

The price of Solana set a new record last week as investors continued to bet on the company’s success in the decentralized finance (DeFi) and nonfungible tokens (NFT) sectors. For the first time in history, the SOL/USD exchange rate hit $146, after a 35% gain from month-to-date.

This huge rise pushed the pair’s annual returns over 7,500%. Due to the cryptocurrency’s rise to record highs, overvaluation risks have also been highlighted, and the relative strength index (RSI), has shown the readings of an overbought asset. However, a slight ongoing correction is observed as SOL has consolidated to around $141 for now.

The use of Solana blockchain for NFT creation

The cost of processing and validating transactions on the blockchain is paid by users of NFT and DeFi platforms. Gas fees fluctuate based on the network. Many NFT and DeFi projects are based on Ethereum’s native token Ether (ETH), however, this is also why the network frequently experiences excessive fees.

With lower gas fees and higher scalability, investors now consider Solana to be a long-term contender to Ethereum. It is also termed the ‘Ethereum-killer’ by many crypto enthusiasts.

The popularity and relevance of the Solana blockchain can be deemed from the fact that Audius, a blockchain-enabled music streaming platform has also integrated Solana to support its NFT project. While more organizations and networks start using the Solana Blockchain, it is high time to consider it as a reliable project, set to rule the market in the coming times.

Ignition – a mysterious burning event for Solana?

Another major reason for the growth of SOL was its surprise burning event. The global hackathon also termed Ignition will run from August 31 to October 8. To drive growth and innovation on the Solana public blockchain, the contest is designed to attract talent and ideas. In addition to the prizes from event sponsors, such as Microsoft, Jump Capital, and Standard Chartered, Ignition will offer over $5 million in rewards and seed funding.

Decentralized exchange mango markets, which won the recent hackathon and contributed $30,000 to the prize fund, will also add to the prize fund.

For the first time in history, SOL prices soared above $100 after Ignition was mislabeled by speculators as a SOL burning event. However, the event continued to be a catalyst for the SOL token, as it kept on growing even after confusion about the event was clear.

Conclusion

The growth of SOL proves that the crypto industry has a lot to offer for those projects that carry the real essence and concept of the crypto realm. Projects with strong fundamentals surely have a tendency to grow and explode in the marketplace, sooner or later.

Therefore, the future for SOL looks quite bright, even though it still has a lot to accomplish and prove. Regular upgrades and developments can make the SOL blockchain more effective and user-favorite. Thus, crypto enthusiasts should surely keep an eye on the project.