Solana Hits New Record High as Layer 1 Tokens Follow Bitcoin’s Gains
Momentum has been building after bitcoin hit an all-time high last week.
Prices for Solana’s SOL tokens hit a record high during early U.S. trading hours on Monday, one of the majority of tokens native to layer 1 blockchains that followed bitcoin higher.
Layer 1 is the base layer, the main network on which a cryptocurrency, such as bitcoin, runs. Bitcoin’s price hit a record high last week.
SOL, the native token of Solana, a public blockchain that is backed by Sam Bankman-Fried, the founder of crypto exchange FTX, hit a record $218.90 on Monday, according to TradingView.
“SOL was a top performer over the last few months ... [It’s] only natural for it to perform well during the next leg of the bull cycle,” Ashwath Balakrishnan, research associate at crypto research boutique firm Delphi Digital, told CoinDesk. “Crypto runs on memetics ... So what performs well during uptrends is what everyone is looking to buy.”
According to decentralized finance data provider Defi Llama, the total value locked (TVL) in Solana reached an all-time high of approximately $13.91 billion on Monday. TVL is the U.S. dollar value of the cryptocurrency committed to DeFi protocols that are built on a layer 1 blockchain.
At the time of publication, SOL is also one of the most traded tokens on centralized exchanges, according to CoinGecko. The majority of the trades have taken place on popular exchanges Binance and Coinbase.
The price rally for SOL also reflects a win for most tokens representing projects that are built for the DeFi sector. At the time of publication, prices for nearly all tokens for layer 1 blockchains were in the green for the past 24 hours, according to Messari.
“When bitcoin momentum slows down, layer 1 tokens often perform better than any category,” Delphi Digital wrote in a market report dated Oct. 21. “Layer 1s have been the best-performing tokens since the June bottom – and quite frankly, they boast the highest year-to-date returns, too.”
Bitcoin, the No. 1 cryptocurrency by market capitalization, soared above $63,000 on Monday after dipping below $60,000 on Sunday. It hit a record high last Wednesday of $66,974.77, per CoinDesk’s data.
The bitcoin dominance ratio, which measures bitcoin’s market capitalization relative to the total crypto market capitalization, dropped to as low as 44.62% over the weekend, before it returned to roughly 45% on Monday, according to TradingView. The decrease in the dominance ratio in the past few days indicated that at least part of bitcoin’s momentum had shifted to other tokens.
This phenomenon is also proved by price gains of ether, the token of the Ethereum blockchain – the king of layer 1 blockchains that support DeFi protocols. Ether’s price rose above $4,300 briefly on Oct. 21, according to TradingView, a level near its record high of $4,379.11 in May.
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