Solana price hits a new 2023 high — What’s behind the SOL rally

Solana’s native token (SOL) experienced an impressive 22% surge on Nov. 10, breaking past the $54 mark for the first time since May 2022. Notably, this surge occurred amid the continuous selling of SOL tokens by FTX’s bankruptcy estate. The Delaware Bankruptcy Court approved the sale of the failed exchange FTX assets, which included 55.75 million SOL in September 2023.

Investor enthusiasm for SOL’s price increase may be attributed to the fact that some of the tokens from the bankruptcy proceedings are either vested or locked. Furthermore, there’s a weekly sale limit of $100 million imposed as part of the FTX liquidation plan. In essence, the initial fear of asset liquidation has transformed into hope as investors realize the limited impact of the sales.

FTX has been selling between 250k-700k $SOL every day for the last 2 weeks while price has either been going up or sideways.

so far its been getting absorbed like a champ and at current rate their unlocked tokens should be depleted within a week.

once this seller is gone i can… pic.twitter.com/AtnTqz3uxG

— Bluntz (@Bluntz_Capital) November 9, 2023

As trader and independent analyst ‘Bluntz’ aptly described the situation, SOL’s resilience during the FTX bankruptcy token dump is impressive. The post on X, (formerly Twitter) adds a bullish case for SOL, stating,

“Once this seller is gone, I can only imagine how hard it’s gonna pump.”

SOL price has been fueled by solid demand for leverage longs

SOL’s substantial 39% weekly gains have pushed its futures open interest to $745 million, the highest level since November 2021 when SOL achieved its all-time high of $260. Still, in futures markets, leverage longs and shorts are constantly matched, so it’s crucial to examine SOL’s funding rate for a more nuanced perspective.

A positive funding rate indicates that longs (buyers) demand more leverage, while the opposite occurs when shorts (sellers) require additional leverage, resulting in a negative funding rate.

SOL’s current futures funding rate represents a 0.5% weekly cost for leverage longs, which is not excessive given the prevailing bullish momentum. Yet, this is a significant shift from the funding rate levels observed three weeks earlier when leverage shorts were paying for leverage use.

While it could be argued that SOL’s rally was primarily driven by derivatives markets, there’s solid evidence indicating growth in terms of deposits and the usage of…