Why is Solana (SOL) price up today?

Solana (SOL) price is up today, buoyed by a modest recovery in the broader cryptocurrency market. SOL’s rebound follows Bitcoin’s pump after a softer-than-expected CPI reading for May.

Data from Cointelegraph Markets Pro and Coinbase revealed that SOL’s price was $159, up approximately 5% in the last 24 hours and 36% from its local low of around $118, established more than five weeks ago.

SOL/USD daily chart. Source: Coinbase

The smart contract token has performed well over the last few months, rising more than 88% over the last six months and 56% year-to-date. Its market capitalization is $73 billion, cementing its position as the fifth-largest crypto by market value.

Solana-based memecoins are recovering

Solana’s rally on June 12 coincides with an ongoing rebound in the prices of memecoins built on its network. Most of them are posting double-digit gains, as shown in the figure below.

For instance, Dogwifhat (WIF), the leading Solana memecoin by market capitalization, has surged by over 12.7% on a 24-hour adjusted timeframe. Similarly, other top memecoins, including Bonk (BONK), Popcat (POPCAT), and Myro (MYRO), have surged 14%, 12% and 16%, respectively, in the same period.

Solana memecoins performance. Source: CoinGecko

This memecoin frenzy accompanies a rise in on-chain activity within the Solana ecosystem, according to the data provided by Dune Analytics dashboard pump.fun. Today’s SOL price rise, in particular, was preceded by a sharp increase in the number of transactions deployed on the network.

The chart below shows that daily transactions on the Solana blockchain increased from 11,629 to 16,450 between June 4 and June 10.

Solana’s deployed transactions performance chart. Source: Pump.Fun

The influx of memecoins on Solana indicates heightened network activity and growing adoption. More user interaction with the platform leads to increased transactions and network usage, driving demand for SOL and driving its price higher.

Solana derivatives metrics indicate potential upside

Notably, the demand for leverage through SOL futures has remained unaffected by the recent drawdown in prices across the broader crypto market. Perpetual contracts, also known as inverse swaps, feature an embedded rate which, when positive, indicates increased demand for leverage among long (buy) positions. Conversely, a negative funding rate suggests a need for more leverage among short (sell) positions.

SOL futures 8-hour funding rate. Source: Coinglass

Data from Coinglass shows that SOL’s funding rate has increased from 0.0054% to 0.01% per eight hours between June 11 and June 12, translating to about 0.2% per week. This increase in demand following a 5% price growth in SOL is an indicator of positive market sentiment.

Solana TVL increase over the last month

Data from DefiLlama shows Solana’s total value locked (TVL) increased to $4.8 billion on June 8. The last time the TVL on Solana reached such levels was at the beginning of April.

The chart below shows that Solana’s TVL has increased by 13% over the last 30 days.

Solana total value locked. Source: DefiLlama

This increase in TVL has occurred in tandem with the increase in SOL’s price, which is more than 10% over the same period.

Taking a closer look at Solana’s TVL increase, several layer 2 protocols, such as Jito and Sanctum, have posted double-digit gains over the last month, contributing to the increase in the value of the underlying network.

Top blockchains: percentage change in TVL. Source: DefiLlama

The rising TVL reflects traders’ interest in SOL’s DeFi ecosystem and shows Solana continuing to attract new users because of its lower traction costs, particularly those hunting for new airdrops.

Data from Solscan shows that Solana’s fees remain consistently low, between $0.0001 and $0.0004, which is considerably lower than transaction fees on Ethereum.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.