Solana (SOL) has surpassed Cardano (ADA) and Tether (USDT), the leading stablecoin, to become the fourth-largest cryptocurrency by market capitalization.
At the time of publication, the total value of SOL tokens in circulation was slightly more than $76 billion, trailing only Binance Coin’s (BNB) $109 billion, Ether’s (ETH) $540 billion, and Bitcoin’s (BTC) $1.17 trillion.
Meanwhile, the market capitalizations of Cardano and Tether are $66.39 billion and $74.42 billion, respectively.
SOL’s bullish outlook is boosted by the launch of a $100 million fund.
Solana’s market capitalization increased as the value of its native token, SOL, reached a new high. On November 7, the SOL price surpassed $262 for the first time in history, owing primarily to a market-wide price rally in which other top cryptocurrencies saw similar gains.
Meanwhile, SOL received additional bullish cues from Solana’s venture capital arm’s foray into Web3 gaming development. Solana Ventures, along with FTX and Lightspeed Venture Partners, announced on Friday that it would invest $100 million in game studios and technology.
Solana Ventures hopes to attract desktop and mobile video game developers to build their projects on top of its public blockchain, increasing the likelihood of SOL adoption. A similar surge in 2021 helped drive the SOL price up by nearly 17,500% year to date, from $1.51 to $262.45.
The uptrend began when speculators began to regard Solana as one of the most serious challengers to Ethereum, the leading smart contracts platform that is dealing with higher gas fees and network congestion issues.
Solana, for example, claims to be able to process 50,000-60,000 transactions per second (tps) for an average transaction fee of $0.00025. In comparison, Ethereum transacts at a rate of 15-30 transactions per second, with a median transaction cost ranging between $4 and $21.
According to Bloomberg, Paul Veradittakit, a partner at Pantera Capital, Solana is the “top competition” to Ethereum, Cardano, and other smart contract platforms in terms of “developer adoption and momentum.”
Nonetheless, Solana showed signs of resource exhaustion, such as a lack of prioritization among SOL transactions and a lower number of validators, which resulted in an eighteen-hour network outage in September. If not resolved, it may increase the likelihood of reversed or altered transactions across the Solana network.
Price correction risks for SOL
Despite its recent rally to an all-time high, SOL faces a correction as a result of at least two bearish indicators.
To begin, the SOL price has been forming a Rising Wedge, a technical pattern that usually results in lower prices. Second, the cryptocurrency has shown a bearish divergence between its rising price and declining momentum (as confirmed by lower highs on its daily relative strength index).
A break below the lower trendline of the Wedge, accompanied by an increase in volume, could send the SOL price as low as the maximum height. That puts SOL’s downside target somewhere between $205 and $91.52, depending on where the bearish breakout occurs.