Solana is the best performing asset in the CoinDesk 20 index this week, up 11%, while BTC and ETH declined.
Solana's SOL price (CoinDesk)
With blockchain activity thriving on the network, Solana's SOL has outperformed Ether (ETH) and Bitcoin (BTC).
The latest meme coin trends, driven by AI agents promoting and investing in tokens, are primarily concentrated on Solana.
Over the past four days, open interest in Solana futures has increased by nearly 3 million SOL, or $506 million.
While the overall cryptocurrency market has entered a consolidation phase after a rapid recovery from the lows in early October, Solana (SOL) has shown strong momentum against several major cryptocurrencies.
SOL is the best performing asset in the CoinDesk 20 index over the past week, rising 11%, while nearly all other constituents declined, including a 2.5% drop in Bitcoin (BTC) and a 3.5% decline in Ether (ETH).
TradingView data shows this has pushed the SOL price to a new all-time high relative to the Ether price of the competing Layer 1 network Ethereum, surpassing the 0.064 level first reached in August.
At the same time, SOL has also shown relative strength against Bitcoin, with its price against BTC reaching the highest level in over two months.
Solana's price performance relative to BTC and ETH (CoinDesk index)
The price action coincides with a resurgence in meme coin speculative activity, a significant increase in network revenues, and a rise in bullish bets in the crypto derivatives market.
Solana activity thrives on meme coin frenzy
The speculative frenzy around meme coins has reignited, and Solana has greatly benefited, with much of the activity centered around decentralized finance (DeFi) protocols built on Solana. The latest trend or craze of AI agents massively issuing meme coins is also primarily based on the Solana network.
A key example is the Goatseus Maximus (GOAT) token, which has surged from zero to over $800 million in market cap in just two weeks, with heavy promotion by the AI-powered bot Truth Terminal backed by Marc Andreessen. The token was created on October 10 by an anonymous developer using Pump.fun and endorsed by Truth Terminal.
In a report on Wednesday, DeFi analyst David Zimmerman of K33 Research wrote, "This has birthed a complete narrative of the intersection of AI, meme coins, and crypto." "AI meme coins have garnered immense attention in the past two weeks, with many tokens reaching market caps over $100 million."
The meme coin frenzy has driven Solana's blockchain activity to new highs. Token Terminal shows that on Tuesday, the network's daily transaction fee revenue exceeded $4 million, nearing the record set in March and up tenfold from the lows in early September. Meanwhile, the number of active users on the chain has risen to a record-breaking over 8 million.
Solana's on-chain activity surges (Token Terminal)
The higher revenues have also helped curb token inflation, with over 15% of newly issued tokens being destroyed or burned, according to Blockworks data.
Open interest soars
CoinGlass shows that open interest in the SOL futures market has climbed to over 18 million SOL, or $3.09 billion, the highest nominal value since January 2023. In just the past four days, open interest has increased by nearly 3 million SOL, worth $506 million.
Open interest refers to the total value of outstanding futures bets or unsettled futures contracts. It is one of the best ways to gauge whether new money is entering the market. It can be measured in native token terms, such as the nominal value of solana (SOL). Native tokens are the preferred denominator because the nominal value is affected by the asset's price movements. A surge in leverage could lead to market volatility, and we may see large short or long liquidations if prices start to move in one direction or the other.
The funding rate for perpetual contracts is annualized at 10%, which measures the price that long traders must pay to short traders to keep their perpetual futures positions open, indicating that the majority of the bets are long, expecting prices to rise.
