Solana’s SOL climbs with no real leverage

BTC and ETH are shot by the rumors about ETF. And SOL ? No obvious reason explains its increase of the moment, nor the liquidity nor theactivity from market makers. The growth of the token query therefore.

Bitcoin recently reached a level not seen for a long time, dating back to the Terra and Luna crash. While trading activity hasn’t taken off as such, the BTC price continues to rely on investors’ expectations of a spot ETF.

For Ethereum, the growth leverage is identical, propelling the token price beyond the $2,000 mark. A slight correction has since occurred. But how can we explain the dynamic that SOLthe native token of Solana ?

No obvious catalyst

For Kaiko’s analysts, Solana’s price growth has no “obvious catalyst”. On November 13, however, the SOL price touched $60. This was a first since May 2022.

By the end of October, it had already exceeded its FTX pre-bankruptcy price level of $35. SOL is currently trading at around $58, according to Coinmarketcap. Its capitalization of over $24 billion ranks it 6th ahead of Circle’s USDC.

To consolidate a sustainable and solid rise, liquidity would have to be at a premium on centralized exchanges, reminds Kaiko. But this is not the case.

We can see that this is not the case, at least if we measure liquidity in terms of order book depth”, say the analysts.

No liquidity or market makers

Market depth at 1% of average price indicates a decline in the total quantity of bids and offers on SOL order books. The same liquidity measured in dollars certainly reflects an increase, but this is mainly due to price effects.

Over 7 days, Solana has nevertheless jumped 34%. Another lever that should, in principle, underpin a rise in the token’s value is market maker activity. The problem is that “ have not returned to the SOL markets “.

The reason for Solana’s ascent is typical of the crypto markets since last year: low liquidity. And this is the most likely hypothesis for Kaiko as far as SOL is concerned.

FTX’s SOL sales triggers

Low liquidity could actually contribute to SOL gains; the less liquidity there is on the demand side, the easier it is to drive the SOL price higher,” the company says.

Clearly, in the absence of solid fundamentals, price inflation is proving very fragile.

This price surge is particularly surprising considering that the bankrupt FTX exchange has reportedly withdrawn from staking and transferred millions of SOL tokens to centralized exchanges,” adds Kaiko.

These forthcoming (or already ongoing) sales, authorized by the courts, raised fears of a decline in various altcoins, including Solana. So far, however, the opposite has been true, with a rise in SOL “ far surpassing “ that of BTC. Until when, in the absence of solid levers?

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