Solana (SOL) has continued to shine in the broader digital currency ecosystem. While retaining its position as the fifth-largest coin with a market capitalization of $72 billion, many believe it is undervalued. The reason for this position is simple: the coin boasts a very robust ecosystem.
As of writing, the price of Solana was changing hands for $153.9, up by 0.93% in 24 hours. It is generally believed that SOL could retest the $200 price mark this “Uptober” rally. For this to happen, the projection is that it will need to sustain its current growth course. Here are three reasons why Solana may retest the $200 local high this month.
The Solana DeFi Boost
Solana’s ecosystem growth is all-encompassing. However, one of the biggest beneficiaries of this growth is its Decentralized Finance (DeFi) ecosystem. Per data from DeFiLlama, the Total Value Locked (TVL) is currently pegged at $12.576 billion. What is intriguing about this figure is that it is at its All-Time High (ATH).
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In terms of actual SOL deposited, 81.33 million units are locked up in Solana’s smart contracts. Protocols like Jito, Raydium, and Kamino Finance boast the largest value locked on Solana.
Notably, if this DeFi lockup continues, it will usher in scarcity into the broader ecosystem. This is good for Solana’s price and might help reboot the uptrend in the coming weeks.
The Memecoin Explosion
Over the past years, memecoins have always shaped the adoption of several layer-1 and 2 protocols. While Ethereum pioneered the trends, Binance Smart Chain joined the league, and now Solana is trending in this niche.
The growth of memecoins on Solana is arguably responsible for driving its valuation into the top 10. Since SOL is required for transactions in the network, the demand for the coin has remained consistently high this year. Many memecoin creators wish to recreate the successes of tokens like BONK and Dogwifhat (WIF).
Notably, this desire has further propelled the memecoin craze within the network. If sustained, this might have a major upside for SOL price in the coming weeks.
The Uptober Effect
Solana is a relatively new asset class compared to Bitcoin (BTC), Ethereum (ETH), and XRP. However, it has experienced enough October to glean insight from its historical context.
According to data from Cryptorank, Solana’s average growth rate in October was 15%. Since 2020, data has recorded two positive and two negative monthly price trends, respectively. However, the October 2021 close of +43% and the 2023 close of +80.1% far outweigh the negative close in 2020 and 2022.
If the positive side of history repeats itself, Solana might double its current positive growth of 0.87%. If this is achieved, hitting the $200 price target may become more achievable.
One Major But
While Solana’s prospect of retesting the $200 price rally is high, there is one major headwind to watch.
This hinges on the lack of regulation guarding the US market. Under Chairman Gary Gensler, the country’s regulatory climate might tilt the broader market balance and derail the positive Solana streak. This regulatory uncertainty is already casting doubts on the prospects of a spot Solana ETF product.
