Solana prices spiked today, pushing higher as traders rotated into the altcoin after benefiting from sharp gains in bitcoin and ether.
The price of SOL, the native token of the Solana platform, reached $134.38 today, CoinMarketCap figures show.
At this point, it was up more than 23% after falling to $108.82 less than 24 hours before, additional CoinMarketCap data reveals.
When asked to explain these latest gains, market analysts repeatedly pointed claimed that SOL was benefiting as traders took their profits from bitcoin and ether and put it into the smaller cryptocurrency.
“Both Bitcoin and Ethereum have outperformed Solana since the start of the year,” Joshua de Vos, research lead at CCData, said via emailed comments.
“This is likely driven by excitement surrounding the launch of the Spot Bitcoin ETFs, which have generated significant inflows and widened access to institutional participants, and the highly anticipated approval of Ethereum Spot ETFs later in the year,” he added.
“However, as the market digests the ETF news and its success continues to drive positive sentiment into the market, Altcoins become a more attractive choice, given that liquidity tends to flow from the top of the risk curve towards the bottom,” said de Vos.
“As Bitcoin hit a major resistance at $65,000 and consolidated, this allowed for Altcoins to catch a bid as new capital in the form of Bitcoin and Ethereum profits found their way into other, more speculative assets,” he emphasized.
Aaron Golbin, managing partner at LvlUp Ventures, offered a similar point of view.
“As often happens following a large rally in Bitcoin and other ‘mega crypto currencies,’ some investors flock to smaller currencies as well as tokens such as Solana,” he said via emailed comments.
The analyst also spoke to the impact that today’s inflation figures had on investor sentiment. Earlier today, the Bureau of Economic Analysis revealed that personal consumption expenditures, the so-called favorite of Federal Reserve policymakers, rose 2.4% year-over-year.
This represented the smallest annual gain in almost three years, as the PCE rose 2.2% in March 2021.
The tepid inflation report increased hopes that Fed policymakers will cut rates more quickly than they would have otherwise, a development that could prove beneficial to risk assets.
Golbin summed this up nicely, stating the following:
“Additionally, the growing positive market sentiment — especially after this morning’s latest inflation numbers — continues to push crypto higher as people pour into higher-risk asset classes.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
