YEREVAN (CoinChapter.com) — Solana (SOL) made waves in 2023, growing 1,000% in price throughout the year. However, the question remains if the Solana price will continue to rise in Q1/2024. Here are several reasons to back the bullish scenario.
Solana Surpasses Ethereum in Revenues
After the mentioned boom in Q4, 2023, Solana’s revenue growth continued into 2024. The altcoin bagged a revenue growth of over 200% to $6.4 million in the previous 30 days, according to data provider TokenTerminal. The results pushed the annualized revenue to a 174% growth at just below $79 million.
Notably, Solana flipped Ethereum in revenue growth, if not in absolute revenue size. The leading smart contract platform (SCP) registered a 24% decline in 30d revenue.
In detail, Solana’s revenue primarily comprises transaction fees and staking rewards. When users conduct transactions on the Solana network, they pay transaction fees. Validators and delegators then receive these fees as rewards for their roles in processing transactions and maintaining the security of the network.
In addition to transaction fees, staking rewards are another significant source of revenue for those participating in the network’s security.
Capital Flow to Solana Funds Steady in Q1/2024
Institutional investors have favored Solana over Ethereum since 2022. According to CoinShares’ yearly report, Solana saw a fund inflow of $121 million in 2022 and $167 million in 2023. In the same period, Ethereum’s $78 million inflow in 2023 not only didn’t equal Solana’s gains but also didn’t pare 2022’s massive $143 million outflow.
The most recent report for the week ending Jan. 13 showed a positive dynamic with a $0.5 million inflow. While the funds did not cover the previous week’s outflow, the positive tendency could continue into Q1 2024, raising the Solana price further.
#3 Solana Dominance Growth in 2023-2024
Solana’s DeFi market dominance was under 0.8% in early 2023 and grew to 2.4% in Jan 2024.
Solana also considerably grew in terms of total value locked (TVL), decentralized exchange (DEX) volume, and active user count in Q4, 2023, which could testify to higher investor trust and, subsequently, Solana price rise in Q1 2024.
Moreover, as seen in the chart above, the Solana daily active user count doubled in Q4 alone, considerably higher than other SCPs. The DEX volume growth also trumped competitors with a 960% increase quarter-over-quarter.
#4 Firedancer Increases Solana’s Scalability in 2024
Firedancer is a new validator client developed for the Solana blockchain by Jump Crypto, a division of Jump Trading Group. The latter specializes in Web3 infrastructure development and investment. Introduced in late 2023, one of the primary goals of Firedancer is to enhance the performance and scalability of the Solana network.
Did you know? Blockchain scalability refers to a blockchain’s capacity to manage a growing number of transactions efficiently. The main challenge is maintaining speed and security as transaction volumes increase. In many blockchains, higher transaction loads can lead to network congestion, slower processing, and increased transaction costs, impacting the user experience and blockchain utility.
Firedancer is engineered to handle many transactions per second, addressing some of the historical weaknesses of Solana’s original validator client developed by Solana Labs. This includes tackling issues such as limited concurrent transaction processing and a lack of sharding support.
#5 Bull Flag Supports Solana Price Rise in Q1 2024
Solana token formed a ‘bull flag’ pattern, best visible on the daily chart. The bull flag is a continuation pattern that appears during an uptrend. It resembles a flag on a pole; the pole is formed by a steep price rise, followed by a consolidation, or a correction, forming the flag.
The pattern suggests a potential upward breakout equal to the pole’s length and pinpoints the target price for SOL at approximately $130, or 30% higher than the current value of $100.
