Solana up 24% – BONK Enthusiasm or Sustainable Growth?

Solana up 24% – BONK Enthusiasm or Sustainable Growth?

  • The Solana blockchain’s native token, SOL, has seen a boost in prices over the last week.
  • The rebound in trading value has partly been due to a favorable tweet made by Ethereum co-founder Vitalik Buterin.
  • The launch of the Solana-based canine meme coin Bonk (BONK) resulted in a fresh surge, as the token recorded a 4424% increase within one week of its launch.

Solana (SOL) has seen a boost in prices over the last week, from trading in the $17.00 USD range on January 13th, 2023, to $21.43 at the time of writing.

The token has experienced a rebound in value over the past few weeks. SOL has doubled in price from its initial January lows to consistently hover at around $21, even reaching as high as $24 earlier this week. SOL has recorded a 116% increase in value so far this year, representing a swift rebound after it hit a record low of $9.91 on January 7th, 2023.

Solana's 30-day price chart from CoinMarketCap

30-day price chart for Solana. Source: CoinMarketCap.

Bonk or Boost?

Solana’s recent trading volume surge has been linked to the release of Solana-based canine meme coin Bonk (BONK). The meme coin was quickly adopted by the Solana community, experiencing a “supersonic bull run with a 4424% increase just one week after launch”.

BONK has consistently dropped in value since January 15th, 2023. Despite this, Solana (SOL) has continued to undergo an upward trend since January 3rd, 2023, which suggests more sustainable growth than the initial hype that was believed to be driving the surge.

The rebound was also attributed in part to a favorable tweet made by Ethereum Co-Founder Vitalik Buterin, stating that he hopes the Solana community “gets its fair chance to thrive.”

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The Solana protocol aims to facilitate the development of decentralized applications (dApps) by integrating a Proof of History (PoH) consensus mechanism with its core Proof of Stake (PoS) system. The approach is intended to increase scalability and make the platform more attractive for dApp developers. Despite the negative impact the FTX collapse had on the crypto market, Solana’s native token (SOL) has shown remarkable tenacity.

On the Flipside

  • If Solana’s recent trading volume surge proves to be correlated to growing interest in Solana-based meme coin BONK, it is not a long-term solution.
  • Data shows that the total value locked (TVL) on the Solana chain dropped 96% in 2022, with SOL currently ranking 11th by market cap.
  • Solana has been criticized for being too centralized and venture capital controlled, which may limit its long-term potential.

Why You Should Care

With the after-effects of the FTX collapse not yet subsided, Solana (SOL) must exhibit sustainable growth. With its dApp and PoH developments in the pipeline, Solana may soon build towards a more attractive and decentralized ecosystem.

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