Solana's sol token rose by as much as 37% to a new all-time high on Tuesday, driven by an ongoing boom in demand for assets with strong decentralized finance capabilities.
Sol hit a record $195.70 earlier in the day, marking a rise of around 37% in a 24-hour period, according to data from Coinbase. It was last at $185.62, up around 13% in the 24 hours to 07:06 ET.
Sol has one of the best-performing cryptocurrencies in the last month, having risen by over 350%, compared with an 84% gain in cardano's ada, a 64% rise in polkadot's dot and increases of just 24% in ether and 16% in bitcoin.
Behind sol's success is the growing popularity of the solana blockchain that underpins it. Much like rival ethereum, the blockchain can host decentralized finance applications such as smart contracts, and non-fungible tokens.
"It is a known fact that every cryptocurrency has its season, and we can notably say that this is solana's reign to outpace the rest of the market," Greg Waisman, co-founder and COO at the global payment network Mercuryo said.
"Solana is now an attractive asset to both retail and institutional investors as the DeFi and NFT marketplaces built on the network cater to the needs of both classes of investors," Waisman continued.
Non-fungible tokens (NFTs) are unique tokens on the blockchain that are tied to assets like artwork, videos, documents and more that cannot be exchanged like-for-like, as a cryptocurrency is. Smart contracts are key to DeFi. Their code allows two parties to exchange money or goods without a centralized player like a commercial bank or broker.
"These projects place a huge demand on sol tokens, and also drive corresponding price growth," Waisman said.
Last week, sol overtook dogecoin to become the seventh biggest coin by market capitalization, according to CoinMarketCap, with a market value of around $54 billion.
Investors piled a record $13.2 million into solana-backed investment products last week, bringing total assets under management to $44 million and marking a rise of 193% in one week, according to data from digital asset manager CoinShares on Tuesday.
"Solana remains the favorite with weekly inflows totalling $13.2 million last week, doubling its total inflows year-to-date," CoinShares said in a weekly flows report.
"Sol is potentially a $500 digital coin, and the price growth of sol in recent times points to the capacity of the token to receive enough boost to hit this mark before the end of the second half of 2021," Waisman said.
Investors have been frenziedly buying into altcoins in recent weeks, resulting in the likes of link, dot and xrp climbing to multi-month highs on Monday.
But JPMorgan has warned the huge gains in some of these smaller rivals to bitcoin and ethereum's ether token could be a sign of overheating in the crypto market.
"Retail investors propelled "altcoins" in August making cryptocurrency markets look frothy again," Nikolaos Panigirtzoglou, a cross asset research analyst from JPMorgan said in a note last week.