Solana (SOL) started Friday at a new record high as investors continued to bet positively on its success in the decentralized finance (DeFi) and nonfungible tokens (NFT) sector.
The SOL/USD exchange rate reached $146.28 for the first time in history, following a 35% month-to-date rally. The huge upside move lifted the pair’s returns for the year above 7,500%, taking Solana’s market capitalization over $41 billion to make it the seventh-most valuable project in the cryptocurrency space.
Solana’s run-up to record highs also brought overvaluation risks in focus, with a classic momentum indicator, the relative strength index (RSI), returning an overbought reading for the cryptocurrency. Above 70, the RSI suggested that SOL/USD could undergo a sell-off in the coming sessions and that opening a long position on the pair could prove risky.
But analysts noted that it is hard to call the Solana top just yet. An independent market analyst, known by the pseudonym The Crypto Dog, advised speculators to just let Solana ride and see where it goes with its current strength.
Yuriy Mazur, head of data analytics at cryptocurrency exchange CEX.IO, anticipates that SOL/USD rates will cross above $150 in the coming sessions. But he, too, noted that the pair had entered a “price discovery” stage, and its upcoming bias relies on how well Solana emerges in the DeFi and the NFT space.
“The price of Solana (SOL) is on the uptrend as the blockchain is currently showcasing its potentials in serving as a viable alternative hub for all things Decentralized Finance and Nonfungible Tokens,” Mazur told Cointelegraph via email.
Mazur said investors now consider Solana a potential long-term rival to Ethereum, especially when providing lower gas fees and higher scalability. He cited Audius, a blockchain-enabled music streaming platform that integrated Solana to support its NFT project.