CRYPTO

Derivatives data says Solana has reached a short-term peak


Solana (SOL) reached an all-time high of 21 216 on September 9th.

It is worth noting that during the assembly of SOL, the average transaction fee of the Ethereum network exceeded $ 40. Growing interest in the NFT market accelerated the transfer of investors to Solana, which was boosted by the launch of the FTX NFT Marketplace in September.

Solana, Avalanche and Cosmos prices in Binance. Source: Tradingview

The chart above shows SOL’s two-month performance compared to Avalanche (AVAX) and Cosmos (ATOM). Both are fighting for the same decentralized application user-base and offer faster and cheaper transactions than Ethereum (ETH).

Key players in the industry have invested in Solana’s ecosystem because of the potential against Ethereum. In June, Andrisen Horowitz and Polychain Capital led Solana Labs with 31 314 million in funding, which was funded by venture capital firm Andreessen Horowitz, Polychain Capital and Almeida Research.

Does Solana Outage depend on SOL price?

At the Salt Conference 2021, Solana founder and CEO Anatoly Yakovenko told Cointelegraph that the network was “optimized for a specific use: an online central limit order book, a trading method used by exchanges that matched bids with offers for market makers.” It was designed to submit millions of transactions every day. “

Yakovenko then added: “Pareto has a trade-off in skills.

Curiously, on 1 Sep September, the Solana network came to a standstill for more than 12 hours. The team explained that a large increase in the load of 400,000 transactions per second overwhelmed the network, creating a denial-of-service that caused legitimacy providers to fork over.

Solana Futures is the entire open interest. Source: Bybt.com

Despite the recent push, Solana Futures Market’s overall open interest is $ 1 billion, up 640% in two months. This figure makes Solana’s derivatives market the third largest behind Bitcoin (BTC) and Ether. This information confirms the interest of investors, but it cannot be considered bullish because futures buyers (long) and sellers (shorts) always match.

The derivatives market points to a balanced situation

To answer this question, one needs to analyze the rate of funding. In perpetual contracts, also known as reverse swaps, an embedded rate is usually charged every eight hours. This fee ensures that there is no exchange risk balance. A positive fund rate indicates that longs (buyers) demand higher profits.

However, the opposite situation occurs when shorts (sellers) need additional leverage and as a result the fund rate becomes negative.

Solana Permanent Future 8-Hour Funding Rate. Source: Bybt.com

As described above, the eight-hour fee peaked at 0.12% on September 5, equivalent to 2.5% per week. Moment September SOL quickly took over this momentary spike as it faced extreme volatility, after rising to 195 1,1955, the price of SOL dropped 5% in a matter of hours and the leveraged position came to an end, resulting in the current balance between longs and shorts.

The data show no evidence that investors are rushing to add leveraged long positions despite the current 1 billion open interest. Moreover, considering the 410% gain in the last two months, traders have more negative fears because Bitcoin has also failed to break the প্রতি 50,000 psychological barrier and it is not yet confirmed whether the recent sub-$ 40,000 sink was below short-term. .

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