Expanding ecosystem and $1.86B futures open interest might help SOL reach $250 target
Solana’s SOL is meeting resistance near its all-time high again, but solid fundamentals and the impressive growth of its DeFi and NFT ecosystem are likely to drive the altcoin above $250 before year-end.
Institutional investor interest is likely a key factor behind Solana’s impressive 490% gain since August. For example, SOL is the fourth-largest Bitwise 10 Crypto Index Fund component, which overall is a $1.3 billion over-the-counter tradable market instrument.
Solana’s two most prominent DeFi projects are decentralized exchanges, Saber and Raydium, with built-in yield generation programs and they hold nearly $2 billion in total locked value each.
Saber is an automated market maker protocol that trades between stable pairs and synthetic assets and provides yields for the platform’s liquidity providers. Raydium offers a decentralized exchange, yield farming, and liquidity pools.
According to a CoinShares report, evidence of institutional investors’ appetite for Solana was the $12-million weekly inflow in mid-October. In the same week, the United States registered branch of exchange FTX announced support for the Solana blockchain, enabling users to trade, deposit, and withdraw NFTs that conform to the Metaplex token standard.
This positive newsflow has been reflected on SOL’s derivatives markets. The derivative market indicator reached a record-high $1.86 billion on Oct. 25, which is a 123% increase in 30 days. To put things in perspective, Cardano’s ADA and Polkadot’s DOT currently hold a $900-million futures open interest.
However, it should be acknowledged that this event is not necessarily positive, as futures contracts require both a buyer (long) and a seller (short). Nevertheless, this increasing interest allows even more substantial players to participate.
The Solana Foundation stated that bots spammed the network as Grape launched its initial DEX offering on the Solana-based decentralized exchange Raydium. That activity overwhelmed the processing capacity with a transaction load of 400,000 per second, requiring a coordinated hard fork by validators to ignore the spam requests.
All the data illustrates that Solana is 32% higher than the 30-day average, which identified bullish conditions for SOL. As long as Solana’s ecosystem expands, the network remains a viable solution for DeFi and NFT applications looking for cheap, fast transactions. Both on-chain and derivatives indicators signal that $250 SOL by year-end is totally feasible.