Solana prices rallied today, causing the highly prominent cryptocurrency to attain its highest value in several weeks.
The SOL token, which is the native digital asset of the Solana platform, rose to $143.40, according to Coinbase data reported by TradingView.
At this point, the digital asset had appreciated more than 10% in less than 24 hours, additional Coinbase figures supplied by TradingView reveal.
Since then, the cryptocurrency has pulled back slightly, but has managed to retain the vast majority of its recent gains, trading close to $143.00 at the time of this writing.
Fed Rate Cut Boost
When explaining what drove today’s price increase, several market observers pointed to yesterday’s Federal Open Market Committee announcement that it was lowering the target range for the federal funds rate by 50 basis points.
The aforementioned rate, which affects broader borrowing costs, has generated a great deal of visibility in the last few years.
Yesterday, Federal Reserve officials revealed that they were cutting the benchmark rate for the first time in four years.
Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, commented on this situation, offering input via email.
“I believe these recent gains were clearly driven by the Fed’s decision to lower rates yesterday,” he stated.
“With lower rates, people are more willing to borrow funds and invest their capital into speculative areas of the market like crypto,” Sifling noted.
“This general optimism that we are at the end of the rate hiking cycle excited many areas of both the crypto and U.S. equity markets,” he said. “Solana seems to have been a benefactor of that.”
“Since most investors view Solana as an alt-coin, it tends to have a higher beta than Bitcoin,” Sifling emphasized.
“It makes sense that due to its speculative nature and higher beta, that the move was more exaggerated in Solana.”
Julio Moreno, head of research for CryptoQuant, offered a different take on what drove the SOL token’s latest upside, emphasizing that the Fed decision resulted in widespread gains in both cryptocurrencies and stocks.
Solana’s Strong Momentum
While the aforementioned analysts pointed to a broad-based rally in risk assets, independent cryptocurrency analyst Armando Aguilar emphasized the positive developments that have been taking place in the Solana community.
He highlighted the widespread investor interest that this community has been able to attract, noting that many proming Solana-based projects have been raising money, for example Helius, a developer platform that recently raised $21.75 million in a funding round.
Aguilar also noted the venture capital funding that Solana projects have drawn over the last several weeks.
Further, the market observer spoke to the positive impact resulting from the decision of Brazilian regulators to approve two Solana exchange-traded funds.
“Solana ETFs out of Brazil have driven capital inflow, helping the blue chip cryptocurrency climb higher,” he stated.
Aguilar summed the situation up nicely, stating that “Momentum for the ecosystem is high.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
