As the crypto market lit up with green across the board this morning, the price of Solana (SOL) jumped 6% in a few hours overnight to reach a new all-time high of US$218.73, according to data from CoinMarketCap. Solana’s price has since lost some of this ground, however, and was trading at US$208.57 at press time.
- Solana, now the world’s fifth-largest cryptocurrency with a market cap of US$62.7 billion, saw an explosive entry into the crypto top 10 recently where its price jumped more than 400% in the month leading into early September, reaching its previous high of US$214.96.
- The market’s excitement over Solana followed the successful launch of “Degenerate Apes,” a native Solana non-fungible token project, one of which sold in September for 5,980 SOL, or US$1.2 million at the time. Capable of around 65,000 transactions per second, Solana is roughly 2,000 times faster than Ethereum and 40 times faster than Visa. Smart contracts and NFTs have long been the domain of Ethereum, but Solana’s support for these features along with its faster transaction speeds has made Solana into a so-called “Ethereum killer” — a leading rival of the Ethereum blockchain that could erode Ethereum’s dominance.
- But Solana’s growing popularity has also made it a victim of its own success. After SOL reached its September all-time high, its price began receding. The increased demand on its blockchain also caused transactions to surge at one point to 400,000 transactions per second, which was more than the system could handle — causing the network to start forking and some nodes to go offline. Solana later identified the source of the issue as a denial-of-service attack, but the crash spooked investors. Less than two weeks after its September ATH, the price of SOL was down by more than 40%.
- Despite this network outage, Solana continued to see strong institutional investment inflows over that time period, with US$4.8 million being invested in the network that week, according to digital asset manager CoinShares. “This suggests investors were happy to shrug off the attack, seeing it as teething problems rather than something more inherent with the network,” wrote CoinShares Investment Strategist James Butterfill in a report. “Inflows were also likely helped by the speed at which miners adopted the upgraded protocol.”
- Market leaders Bitcoin and Ethereum were both up by about 2% this morning Asia time, at US$62,761 and US$4,234 respectively, according to data from CoinMarketCap.