Solana (SOL) Rallies on News of OpenSea Market

Solana (SOL) rallied above $123, becoming one of the big gainers in the past day. The asset had the strongest gains among the top 10 of large-cap coins, adding more than 11% in 24 hours. The SOL rally happens while Bitcoin (BTC) is still under $48,000 and Ethereum (ETH) stabilized just above $3,400.

The immediate news that boosted SOL came from the NFT space. Solana, which had its own NFT market, will now be added to OpenSea, the biggest marketplace for non-fungible token collections. Solana carries multiple valuable collections, including its own versions of CryptoPunks and Bored Apes.

#SolanaNFTs are coming to @opensea in April 🎨 https://t.co/RHdH8HuWUl

— Solana (@solana) March 29, 2022

The news arrives at a time when some NFT sales have slowed down. OpenSea is key to liquidity for NFTs, and Solana’s collections may rally after the listing. 

Solana Low Fees Attract Collection Builders

Solana’s big advantage in the NFT market is its fast network with much lower fees. The advantage of Solana is that trades are not as prohibitive, especially for items that have a faster turnover. 

So far, Solana has a smaller list of play-to-earn games, and most NFTs are avatar collections. But game NFTs may benefit due to faster resale times and no burdensome fees. Solana is highly active in minting new collections, with some potential to boost their average price and floor price. Not all NFT collections turn into hits and gain highly visible meme potential, but Solana raises the chance of coming across a valuable item.

Will the SOL Rally Continue

SOL’s rally is also part of a trend where lagging altcoins are having a highly active day. SOL moved up just as Waves (WAVES) stepped back from its all-time highs. 

SOL is now at a one-month high, though still far from its three-month peak above $175. The asset peaked near $260, while the most extreme expectations see the value of SOL at above $1,000. 

The trading volumes on SOL pairs are consistent, and often rise above $3B in 24 hours. Over time, however, the dominance of SOL fell from a peak at 2.6% of the crypto market down to 1.5%. SOL often rises in tandem with Avalanche (AVAX) and Terra (LUNA) as funds flow back into these three blue chip tokens. LUNA was the more responsive token, rising to more than $110 and almost catching up with the market cap of SOL above $39B. 

The price of SOL recovered after the Wormhole bridge hack in early February. Fortunately, the funds taken from the smart contract were refilled by the team, putting the bridge back online. The exploit against Solana was also relatively smaller compared to another recent bridge attack against Ronin-ETH bridge smart contracts, which took away between $620M and $630M for the biggest exploit in DeFi space.

Solana suffered another indirect exploit of the Cashio stabelcoin protocol, where a hacker used an infinite mint exploit to drain the liquidity in the protocol’s pools. Cashio is a small-scale stablecoin that has not gained much prominence, but still managed to lock in significant liquidity and allow the hacker to take $28M on March 25. The CASH stablecoin has been frozen since the incident on the Saber platform, one of the leading Solana liquidity hubs.

Solana DeFi Recovers

Solana now holds more than $7.6B in notional value spread over 60 major projects. Solana is one of the few networks where most projects have an equal share, with no one DeFi hub dominating the rest, as in the case of Waves.

The value locked in Solana also rose in the past few weeks, from temporary lows under $7B. An additional 396.3M SOL is being staked to secure the network. The Solana protocol also has a strong community of holders, and frequent calls for airdrops and NFT giveaways. 

How the NFT Market Performs

The NFT market for avatar-like pictures is still dominated by Art Blocks, Crypto Punks and Bored Apes.

Overall, the market is less active compared to the peak in late 2021. But there are temporary spikes for both new collections and resales. The expectations for a recovering crypto market is also reflected in NFT activity. There is a slight pickup of active wallets to around 15M. 

The average price of an NFT has also fallen, though still above $2,000. Rare and exclusive NFT are still on offer, while some collections have lost their potential for peak valuations. 

ApeCoin (APE) is another tool that reflects the value of NFTs. APE settled around $14.10, after a turbulent start of trading. 

The Solana network takes a much freer approach to NFT listings, with multiple projects showing up every day. OpenSea, however, is more selective about listing collections and game items, and may only admit a small part of Solana NFTs. Other important NFT hubs include Binance NFT, a marketplace for avatars, but also featuring many game items.