The digital currency at the core of Solana, a layer-1 blockchain vying with Ethereum, has been put through the wringer, dropping from a high of around $260 in late 2021 to a low of $8 in early 2023. But just like a redeemable character in a gripping film, Solana has its own redemption arc.
On Wednesday, the cryptocurrency soared to $160, its highest price since January 2022. According to CoinMarketCap data, it’s currently the fourth largest cryptocurrency (excluding stablecoins) by market capitalization, behind only bitcoin, ether, and BNB. It has seen a 44.8% increase in value this month and a staggering 676% increase from the same date last year.
This impressive growth can be attributed to the blockchain’s strong presence in various sectors, including its NFT marketplace, which boasts the second largest all-time sales volume at $5.2 billion. It’s also known for its decentralized finance (DeFi) ecosystem and its recent surge in memecoin development, with new tokens popping up on its chain faster than one can write an article. It’s no wonder that this growth and activity is reflected in the value of its token.
In mid-December, several Shiba Inu dog-themed tokens like Bonk and dogwifhat gained significant momentum on the Solana blockchain. In fact, these two tokens, which seek to capitalize on the popularity of the original dog-based memecoin, Dogecoin, have seen a 150% and 600% increase in value this month, respectively. The dogwifhat community even managed to raise about $700,000 in just four days to get the token featured on the exterior of the new Las Vegas Sphere – and all payments were made in USDC, the second-largest stablecoin, rather than US dollars.
But don’t fret, feline lovers: kitty-themed tokens, like Popcat, are also experiencing wild gains. For perspective, Popcat’s value has increased by a whopping 3,205% this month.
Additionally, Bonk and Solana’s web3 smartphone Saga gained more attention when savvy crypto traders realized they could redeem 30 million BONK tokens, valued between $500 to $800 in December, on the device. At current prices, those 30 million tokens are worth nearly $1,000.
In recent weeks, politically-inspired memecoins have also gained traction on the Solana blockchain, such as jeo boden, doland tremp, and the crudely-named elizabath whoren, which currently have market capitalizations of $71.8 million, $47.8 million, and $8.8 million, respectively. (In case you’re wondering, I did not misspell those tokens based on the names of US politicians.)
Even Coinbase, the largest cryptocurrency exchange in America, has shared steps on its website for US users to purchase some of these tokens through alternative means. To trade these cryptocurrencies on Solana, users need the native token of the chain to pay a minimal fee, typically fractions of a penny. (Please note: this is not financial advice, but it may be one of the factors contributing to Solana’s price surge.)
In general, memecoins have witnessed a significant rally as the cryptocurrency market continues to rebound from its recent “winter” period. This, combined with airdrops of project tokens, has sparked a renewed interest in Phantom, a popular crypto wallet within the Solana ecosystem. In the past year, its active user base has more than tripled to 3.2 million monthly active users.
However, it’s important to note that the majority of these tokens do not have any underlying utility – for example, dogwifhat is literally named after a dog wearing a knitted hat. Despite this, people are still eagerly jumping on board, possibly in hopes of quick wealth or due to the unique, often eccentric communities these assets create.
But as the saying goes, what goes up must come down, and the rapid rise of certain memecoins is often followed by extreme crashes, sometimes within days of their launch. While some may maintain price support for months, as we’ve seen with a handful of tokens, it’s crucial to remember that not everything that glitters is truly gold.
