Interest in Solana has reached historic levels, surpassing the September 2021 record of 4.3%. Solana now accounts for 5.5% of total crypto turnover, which translates to $23.8bn each month.



There is increased interest from both traders and institutional investors. Over the last 12 months, institutional investors have poured $121 million into the coin. Solana has overtaken all altcoins combined both in terms of volumes and the annualised rate of capital inflows into exchange-traded funds.



Traders set an all-time record for the volume of open interest on the derivatives market – hitting $834m on 16 November. The previous record stood at $811, recorded in October 2021.



Off the back of such strong investment demand, Solana has grown six-fold to $60 in 2023.



The influx of capital is being driven by significant progress in the promotion of the blockchain: the Solana Pay payment gateway was added to Shopify's e-commerce platform, and VISA is pioneering the network as an interbank exchange tool. In both cases, we are talking about transactions being carried out in USD Coin (USDC). The list of supported coins may be expanded at a later date.

The fact that such large players have chosen Solana is explained by a high degree of decentralisation coupled with ultra-low commissions (less than $0.01) and high transaction completion speeds (up to 2 seconds).



According to Solana co-founder Anatoly Yakovenko, the real "curse" for the network was the number of frequent failures it experienced, which often resulted in a complete loss of functionality. However, Solana has been running smoothly since March, and a future update to the Solana blockchain's validator, Firedancer, will probably solve this problem completely.

Investment firm VanEck optimistically estimates that Solana will hit $3,211 by 2030. The baseline scenario assumes growth to $335.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

More positive sentiment in the crypto industry and the rise of Bitcoin tend to be signs that a good time for altcoins is near. In 2023, Bitcoin's price increased 2.3-fold, which was facilitated by talk about the imminent appearance of spot ETFs in the United States and several high-profile defeats in court for the SEC.



Crypto investors are to track the beginning of the altcoin season since the profitability of low-cap coins often compensates for the higher risks (especially when forming an investment portfolio). One sign of the transition period is increased volume in altcoin trading, which currently accounts for 60% of total trading volume.



Among altcoins, Solana inspires the most interest among investors. We previously discussed why that is. On American crypto exchanges, Solana is confidently leading the way, nearly reaching a trading volume of $15 billion in the spot market in 2023. However, it's still outperformed by Ethereum on international platforms.



In November, after a year of next to nothing, interest in this coin sharply increased after the investment giant BlackRock filed an application for a spot Ethereum ETF. As a result, the funding rate increased sharply. Note: A high funding rate indicates the dominance of bullish positions in the perpetual futures market.



The growing interest in altcoins led to Bitcoin's share decreasing from 54% to 52% in November. However, the trend may reverse if the positive factors don't come to be or don't have the expected impact. Analysts at JPMorgan recently published a sceptical report in which they crushed investors' hopes:

The emergence of spot ETFs will only lead to the flow of capital into them from current investment products (for example, Grayscale Bitcoin Trust) but will not create new demand.
Court losses for the SEC will not lead to a more pro-crypto regulatory environment. As the regulatory framework develops, the approach to crypto will only become stricter.
The effects of halving events are unpredictable, and the reduction in rewards is already priced in.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

For Ethereum investors, 2023 was a tough year as the SEC boosted efforts to label the cryptocurrency a security. The regulator's efforts led to a host of market participants, including Kraken, ceasing to provide staking services. As a result, the altcoin's value declined by 25% against Bitcoin over the course of the year.



In terms of institutional capital inflow into ETFs, it lost to Solana, XRP, Cardano and Litecoin, showing an annual outflow of $125 million.



Even the staking boom ended as the 4% yield couldn't cover losses from Ethereum's weak growth. As such, by October, the long queue of people wanting to become validators had already shrunk so much that the waiting time was reduced from forty days to less than one day.



However, the world's largest asset management company, BlackRock, renewed interest in Ethereum by applying through Nasdaq for a spot ETF on 9 November. The price skyrocketed by 8% to $2,050 on the same day.



Some analysts believe that an investment giant applying for an altcoin ETF signals the inevitable adoption of spot Bitcoin ETFs. This will be a huge step for the crypto industry towards institutionalisation.

On 10 November, Coinshares' Head of Research, James Butterfill, reported that annual institutional capital inflows into Bitcoin reached $1 billion last week, with $424 million of that invested over the past 30 days. For Ethereum, the outflow of funds turned into an inflow.



Due to the jump in interest in Ethereum, the average fee shot to $11 on 9 November, even though it didn't exceed $2 a month ago.



BlackRock's interest in Ethereum gives hope that the altcoin's positions will be restored. Coupled with increased profitability due to higher fees, it'll attract new investors.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

A month and a half ago, the price of a simple transfer was under 50 cents, despite the record-high number of transactions. We gave a detailed explanation of the causes of this phenomenon in our previous article.



The number of transactions has now returned to the same level, but the commission for a simple transfer has increased 16-fold.



The reason for this lies both in the increased number of those wishing to buy/exchange Bitcoin and in renewed interest in Ordinals.



Ordinals are now essentially represented by JSON text messages, which are quasi-tokens. This is similar to ERC-20 in the Ethereum network. If Shiba Inu stands out among these in Ethereum's network, for the Bitcoin network, those would be ORDI or PEPE.



Text ordinals don't take up much space in a block. As a result, in early autumn, the large volume of transactions didn't result in a higher commission. The ordinals were well interspersed between ordinary transfers, taking only unused space. Now, after a surge of interest in Bitcoin, the demand for both the former and the latter has increased. Binance played an important role in the hype by listing ORDI.

The network's average fee is already more than $10 and will continue to grow as some market participants are growing interest in quasi-tokens. The creator of the Ordinals protocol, Casey Rodarmore, previously apologised to users for the innovation, calling 99.9% of quasi-tokens spam.



The only benefit that the traditional Bitcoin community sees in the spread of ordinals is higher earnings for miners.



Due to the high network load, users increase the fee amount to have their transactions included in the blockchain as soon as possible. The revenue for processing transactions jumped in November from 4% to 17% of the block mining fee.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

Bitcoin hits new highs

Renewed interest in cryptos led to new one-year and all-time highs. The net inflow of capital into digital assets over the past 30 days reached $11 billion, which is the best result in 2023.



Over the past six weeks, $767 million of institutional capital flowed into crypto funds, exceeding the $736 million seen in all of 2022. This is the best level since the end of 2021 when the bull market went into decline.



The influx of fresh capital and the reluctance of long-term hodlers to part with their reserves has less to a new high for the number of addresses containing more than $1,000 in BTC. There are now over 8 million such accounts.



CME's open interest in Bitcoin futures on the Chicago Mercantile Exchange is at $3.7 billion, its best level since December 2021. This once again testifies to the increased interest among large capital and the formation of steady demand for the crypto.



The price is at its highest level in 18 months and is currently testing the resistance level at $35,000.



The network hashrate is growing by leaps and bounds. This year, it's increased by 75% to 470 EH/s. By comparison, over the past year, it rose by just 50%. In the absence of a technological revolution, this speaks to an ongoing 'arms race' in the industry and miners bringing additional equipment online.



There are a variety of reasons for interest in the crypto, including the expected appearance of the first spot Bitcoin ETFs in the United States, the upcoming halving event in April 2024, a reduction in the circulating supply, and the Fed potentially reversing its monetary policy.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

Since October, Solana's price has doubled to $42 per coin, reaching a market capitalisation of $17.5 billion. SOL is fourth in the overall altcoin rating (excluding stablecoins) and second in terms of daily trading volume.



Solana is the top altcoin in terms of investment volume in crypto funds due to high interest among institutional investors. Over the past 12 months, $98 million has been invested in Solana funds, while $125 million has been withdrawn from Ethereum funds.



Back in August, we talked about the coin having growth prospects as the project continues to grow its business connections. The Solana Pay service was first added by e-commerce giant Shopify, and later, it was revealed that Visa was using the blockchain for faster and cheaper transactions in interbank exchanges.



In late October, interest in Solana was fuelled by a report from investment firm VanEck, which has $76 billion under management. The report detailed that the base case scenario sees the coin rising to $335 and that the bullish scenario forecasts growth to $3,211 by 2030.



According to VanEck analysts, Solana has a better chance than other blockchains of creating a "killer app" with over 100 million active users. Both the highest bandwidth and ultra-low transaction fees contribute to this.



A significant gap from competitors will be provided by the new Firedancer validator client, which is currently undergoing testing and is expected to be deployed in the first half of 2024. According to Solana Founder Anatoly Yakovenko, Firedancer will be a cure for the "curse" manifested in frequent network failures. Last year, they occurred on average every two months, and in February 2023, the network was down for 19 hours.



But Solana's prospects aren't that sunny. First, the sale of $2 billion worth of SOL from the accounts of the bankrupt FTX began. The liquidator announced a limit of $100 million per month in order not to negatively impact the price. Second, VanEck recognises that because Solana's architecture is so complex, implementing Firedancer doesn't guarantee that there won't be any critical bugs in the future.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)

Binance trial

Binance is the largest crypto exchange, with a 52% share in the derivatives market. But its share in the spot market declined from 55% to 34% in 2023. This was due to American regulators who limited the American division's operation and sued the company and its CEO.



The key risk lies in the Department of Justice joining the SEC's lawsuit, bringing with it more serious charges. According to Bloomberg, the crypto exchange is accused of breaching securities law, tax evasion and helping regional players circumvent international sanctions. These accusations will result in global payment systems refusing to cooperate with Binance, and given its weight, it'll affect the crypto market negatively.

SEC vs altcoins

SEC Chairman Gary Gensler has repeatedly stated that he's prepared to recognise only Bitcoin as a commodity. Other coins, in his opinion, must be regulated by securities law. Under pressure from the SEC, some American crypto exchanges stopped providing staking services. That led to Ethereum lagging behind Bitcoin by 27% in 2023.



The Coinbase crypto exchange strongly disagreed with the regulator's position, so it continued to provide staking services and is ready to defend doing so in its upcoming case. If it wins, Ethereum and some other major altcoins will get a powerful growth boost.

Spot Bitcoin ETFs

A real crypto hype and the onset of the new rally are expected with the emergence of the first spot Bitcoin ETFs in the US. The application deadline expires on 10 January 2024, with one of the applicants being BlackRock, the largest global investment company with $10 trillion in management.



According to Skybridge Capital, if ETFs are approved, the unmet high demand for Bitcoin from institutional investors will lead the price to skyrocket to $250,000 in the new bull cycle.

April 2024 halving

Speaking of the potential crypto hype, it's worth mentioning the upcoming halving of the block mining reward. In April 2024, it'll decline from 6.250 BTC to 3.125 BTC. Reducing issuance is a powerful deflationary factor that fosters the asset's price growth.



The circulating supply has been declining since 2020, and more and more coins are settling in cold wallets until better times. With the emergence of ETFs in the US and halving, a supply shock is inevitable. According to Ark Invest's optimistic forecast, Bitcoin will grow in price to $1.5 million by 2030.

The US Federal Reserve's monetary policy

Since the US is the world's largest economy, its financial policy affects the whole globe. Because inflation accelerated in 2022, the Fed started hiking its key interest rate, which resulted in a global outflow of funds from risky assets (including crypto) into US Treasury bonds.



However, more and more economists agree that the Fed will soon do a 180. Because the rate is high, interest expenses on servicing the national debt reached $1 trillion or 4% of GDP, and for the first time in 20 years, they exceeded defence spending. If the regulator lowers the key interest rate, it would support the crypto market's growth.


StormGain Analytical Group (https://stormgain.com/)
(platform for trading, exchanging and storing cryptocurrency)