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Solana’s&nbsp;native token, SOL (<a href="https://cointelegraph.com/solana-price-index">SOL</a>), gained 2% on March 14, despite not sustaining the $173 level. Remarkably, this movement happened amid a 4% downturn in the wider cryptocurrency market. Currently priced at $164, SOL has seen an impressive 36% increase since March 5, prompting investors to wonder whether the catalysts for a bull run toward $200 still exist.
<h2 id="crypto-regulation-and-u-s-inflation-data-temporarily-stall-sol-s-momentum">Crypto regulation and U.S. inflation data temporarily stall SOL’s momentum</h2>
The downturn in the crypto market is partly due to a notice from Hong Kong’s Securities and Futures Commission (SFC) on March 14. The notice claims that the <a href="https://cointelegraph.com/news/hong-kong-regulators-issue-warning-against-bybit-exchange">Bybit exchange is unauthorized</a> to offer lending and derivatives products in the area. As the second-largest derivatives exchange, Bybit has a significant $15.1 billion in open interest, as reported by CoinGlass.
Additionally, the recent United States Labor Department’s Producer Price Index (PPI) report, which measures the average changes in prices domestic producers receive for their goods and services, influenced investor sentiment. The PPI increased by 0.6% from January to February, diminishing the likelihood of an interest rate reduction by the U.S. Federal Reserve on March 20.
The introduction of reduced gas fees by Ethereum’s <a href="https://cointelegraph.com/news/ethereum-l2s-fees-decline-99-post-dencun">Dencun upgrade</a> on March 13 may have also hindered SOL’s momentum. Analysts have noted that transactions on Base, an Ethereum&nbsp;layer-2 decentralized exchange, are now significantly cheaper than those on Solana.
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 Source: <a href="https://twitter.com/QwQiao/status/1768251997956809114" target="_blank" rel="noopener nofollow">@QwQiao</a>
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For instance, on March 14, the fee for a swap on a Solana decentralized exchange (DEX) reportedly reached $0.37, while a comparable transaction on Base’s DEX was $0.02. However, despite Ethereum’s upgrades, there is still considerable excitement around <a href="https://cointelegraph.com/news/dogwifhat-price-to-10-arthur-hayes">Solana’s memecoins</a> and airdrops, such as Dogwifhat (WIF), Bonk and Jupiter (JUP).
A notable development for Solana’s SPL tokens was when Coinbase, a leading U.S. exchange, created a webpage titled “How to Buy Jeo Boden (BODEN),” directing readers to CoinMarketCap for listings. This peculiar mention was <a href="https://twitter.com/TheStalwart/status/1767899712789577916" target="_blank" rel="noopener nofollow">highlighted</a> by Joe Weisenthal on March 13, and the post on the X social network has garnered over 621,300 views at the time of writing.
In addition to the excitement over upcoming airdrops, this trend has led to a significant increase in the usage of Solana’s decentralized applications (DApps).
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-03/3da4e7cf-6610-4c95-8911-bffd1a11cb72.png" alt="" title="">
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 Blockchains ranked by 7-day DApp volumes, USD. Source: DappRadar
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Recent data from the last seven days shows a 13% rise in Solana’s total value locked (TVL) and a 24% surge in DApp volumes. On the other hand, Ethereum, the leading blockchain, saw a slight decline in TVL but an 11% rise in DApp volumes. However, in absolute TVL figures, Solana still trails behind BNB Chain and Arbitrum, which boast $3.5 billion and $2.6 billion in deposits, respectively.
<h2 id="demand-for-bullish-leveraged-sol-positions-remains-relatively-high">Demand for bullish leveraged SOL positions remains relatively high</h2>
To gauge whether traders remain optimistic about SOL after it reached its highest price in over two years, it’s crucial to examine the demand for leveraged positions in futures markets. The perpetual contract (inverse swap) includes a funding rate that aims to balance out any potential leverage demand disparity.
Related: <a href="https://cointelegraph.com/news/why-is-solana-price-up-this-week">Why is Solana (SOL) price up today?</a>
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-03/8bbad1e3-1440-4c47-86ab-32dd93e58f1d.png" alt="" title="">
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 SOL perpetual futures 8-hour funding rate. Source: Laevitas
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A positive funding rate suggests a higher demand for leverage from long position holders, and rates above 0.10% per eight-hour period, which equates to 2.1% per week, are generally considered excessive and unsustainable. Thus, the current funding rate of 0.05% for SOL is somewhat costly for those holding long positions with leverage, but it is not unusual in bullish market conditions.
Despite concerns about its centralization or stability compared with Ethereum, activity on the Solana network continues to grow. SPL tokens have certainly made a splash, securing multiple listings on leading centralized exchanges. This has encouraged investors to purchase SOL tokens to participate in the numerous ongoing airdrop programs, making a $200 target price seem achievable.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Solana gains 2% during market downturn — Is $200 within reach?

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