Solana Futures OI Surpasses $200M: Are Traders Bullish?

by | Dec 30, 2022 | News, Solana | 0 comments

What Is Solana (SOL)?

Solana is a highly functional open source project that leverages the permissionless feature of blockchain technology to create decentralised finance (DeFi) solutions. While the project’s concept and first development began in 2017, the Solana Foundation, based in Geneva, Switzerland, formally launched Solana in March 2020.

The Solana protocol is designed to make it easier to develop decentralised applications (DApps). It seeks to boost scalability by merging a proof-of-history (PoH) consensus with the underlying proof-of-stake (PoS) consensus of the blockchain. Solana’s innovative hybrid consensus process has grabbed the interest of both retail and institutional traders. The Solana Foundation is dedicated to increasing the availability of decentralised money.

What distinguishes Solana?

Anatoly Yakovenko‘s proof-of-history (PoH) consensus is one of the critical breakthroughs Solana brings to the table. This idea provides for higher protocol scaling, which improves usefulness. Solana is well-known in the cryptocurrency field for the blockchain’s lightning-fast processing speeds. The hybrid protocol developed by Solana considerably reduces transaction and smart contract validation times. Because of its lightning-fast processing rates, Solana has also grabbed the interest of institutions. The Solana protocol is intended for both casual and corporate users.

Solana assures customers that they will not be surprised by increasing fees and taxes. The protocol is meant to have minimal transaction costs while ensuring scalability and quick processing. Solana is ranked number 7 in the CoinMarketCap rating as of September 2021, when combined with the lengthy professional skills developers Anatoly Yakovenko and Greg Fitzgerald offer to the project. This followed a spectacular bull run in which the price of Solana increased by approximately 700% from mid-July 2021.

Following the release of the Degenerate Ape NFT collection, SOL reached an all-time high (ATH) of more than $60, and it has been steadily rising since, owing largely to increased developer activity on the Solana ecosystem, increased institutional interest, a growing DeFi ecosystem, and the rise of the Solana NFTs and gaming vertical.

Solana achieved an all-time high of $216 on September 9, 2021.

Solana has garnered a lot of attention for its speed and performance, and it has even been mentioned as a competitor to Ethereum and the dominating smart contract platform. However, the network has experienced repeated outages, undercutting its pricing and ambitions to become the “Visa of cryptocurrency.” Furthermore, its ecosystem has been accused of unfair tokenomics that favours venture capitalists. Despite the fact that we are in a bear market, institutions are interested in Solana. It has regularly generated positive flows, making it the institutions’ preferred bad market companion. SOL inflows totaled $0.4 million, as previously reported.

The next week, the figure improved much further. SOL reported a $0.7 million positive flow in mid-December. All other crypto asset-related instruments [excluding short bitcoin products], as stated below, saw negative flows. Deribit, the world’s largest options exchange, said on Monday that it will no longer provide Solana inverse products. This implies that following the impending December 30, 2022 expiry, no new Solana inverse options or futures will be listed on the market. Deribit’s Twitter thread did not elaborate on the cause for the deletion. People in the neighbourhood, on the other hand, ascribed the same to perhaps low demand.

Recovery of Futures OI Notes

Aside from inverse Solana products, the Open Interest for conventional Solana futures contracts has recently increased. The same may be said about fresh money entering the ecosystem. On December 17, the total SOL OI [futures] was $163.66 million. Following the progressive slope, the figure is now north of $217 million. In the same time period, the figure on Deribit increased from $1.89 million to $2.03 million.

New money entering the ecosystem is not necessarily a good indication because traders may be collectively channeling them towards shorting the asset. That appears to be the case for Solana this time. The financing rate was somewhat negative on all major exchanges. The same stated that short traders currently have the upper hand since they are ready to support long traders. As a result, the aggregate trader mood is somewhat pessimistic. SOL has lost 2% on a daily basis and 7.5% on a weekly basis. The market-cap asset valued $4.1 billion was trading at $11.31 at press time.