Why did Solana (SOL) price rise this week?

Solana’s native token (SOL) rose 5.5% on December 13 to reclaim the $72 support level. It has experienced a 16.7% correction over the past four days, falling from a high of $77.80 on December 9 to a low of $63.75. The question is whether the factors driving this recovery will continue to support the recent upturn.

The FED announcement and regulatory discussions fueled Solana’s rally.

The rise in SOL was triggered by three factors, in addition to the US Federal Reserve’s announcement on December 13 that it would cut interest rates three times over 2024. Declining returns on bond investments are generally considered bullish for risky assets such as cryptocurrencies.

In a Dec. 12 interview with CNBC, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam noted that “turf wars” between various regulators are preventing the establishment of clear guidance for the sector. Behnam believes that most tokens are products under existing laws and expects the cryptocurrency market to continue.

This view contradicts comments made by U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, who considers most tokens to be securities. The SEC previously classified SOL as a security in a lawsuit against the Kraken exchange in November 2023, despite listing several altcoins such as Cardano (ADA), Polygon (MATIC), and Cosmos (ATOM) in the same complaint.

Solana SPL token listing on Coinbase and airdrop rumors

Solana has seen increased demand for its SPL tokens due to its recent integration with Coinbase and Binance exchanges. For example, Coinbase announced support for Solana’s SPL token, starting with the listing of Jito (JITO) on December 7. The launch was very successful. In the first five days, 67 million tokens were traded, which is impressive considering the token’s circulating supply of 115 million. Also, Coinbase presentation On December 14th, another SPL token, BONK, will be listed.

The successful airdrop of Jito’s liquid staking protocol, which paid out over $14,300 to each participant based on JITO’s current price of $2.90, is SOL as traders will need to interact with decentralized ecosystem applications to qualify for future airdrops. This created significant demand for the token.

Solana’s DeFi and NFT markets are seeing significant growth.

The recent price rise was accompanied by Solana Network data, showing a 12% increase in 7-day trading compared to a 1% decline for Ethereum (ETH) and a 4% rise for BSC Chain (BNB) over the same period.

Likewise, Solana’s Dapps trading volume has surged 83% over the past seven days, while Ethereum’s has increased by 19% and the BSC chain has increased by 44%. Notable highlights from Solana include NFT marketplace Rarible, which boasts 510,940 active addresses, and cross-chain DEX Saber, which is responsible for $113 million in trading volume.

Related: BONK, PEPE and SHIB are threats to cryptocurrencies.

Total value locked (TVL) on the Solana network has reached its highest level since November 2022, before the collapse of the FTX exchange. The current TVL of $930 million represents 80% month-on-month growth and is driven by growth in Marginfi, Kamino and Orca. Lastly, SOL token returns reflect improvements in the Solana NFT market.

Data shows a 56% increase in sales, driven by sales of Tensorians and Mad Lads. In comparison, Ethereum NFT sales fell 4% during the same period, and the leading collection, Bored Ape, saw a 57% drop in weekly sales.

The bullish momentum in the SOL token price is due to the improving regulatory environment, increased demand for SPL tokens and airdrops, and increased network activity, including DeFi and NFT markets.