Solana's SOL Token Surges 20% as Dog Coin Bonk Fires Up Community Interest

Solana's SOL has surged about 20% in the past 24 hours even as larger cryptocurrencies like bitcoin (BTC) and ether (ETH) barely moved, as a decision by newly launched shiba inu-themed token Bonk (BONK) to do a large airdrop generated interest in the Solana community.

SOL leapt back above $13 on Tuesday following nearly nine straight days of losses that saw them trade at just over $8 on Friday. Selling pressure had resulted from Solana's close links to Sam Bankman-Fried, the disgraced founder of crypto exchange FTX, who faces charges of fraud and misappropriation of client funds.

The recent price surge has liquidated some $6.7 million of short positions, according to Coinglass. This is the largest short liquidation since the collapse of FTX exchange and the subsequent market crash in November. Funding rates for SOL perpetual swaps are deeply negative, per Coinglass data, suggesting traders are bearish and betting for the token's price to drop, also known as shorting.

The Bonk airdrop – amounting to 50% of its token supply – likely drove massive community interest. Some 20% of the total airdrop supply is going to Solana NFT collections – comprising 297,000 individual NFTs – and 10% to Solana-focused artists and collectors. Airdrops refer to an unsolicited distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses and are generally used as a tactic to gain users.

It’s a new year, maybe we should integrate some new cryptocurrencies or chains

Should we start with $BONK? Idk

— Magic Eden 🪄 (@MagicEden) January 2, 2023

Bonk saw over $19 million in on-chain volumes in the past 24 hours alone. As of Tuesday, since its Dec. 25 issuance, Bonk has over 85,000 holders and a market capitalization of nearly $93 million. Users have conducted over 500,000 transactions using bonk tokens in the past week, data shows.

Several Solana projects have already integrated bonk tokens for use as payments for listed NFTs, while some introduced “burn” mechanisms for NFT-based events. Token burning means removing coins from the overall supply of a cryptocurrency.

Bonk prices rose some 95% in the past 24 hours. Major memecoins such as shiba inu (SHIB) and dogecoin (DOGE) were unchanged.

Memecoins are known to attract irrational exuberance from the crypto community, with the market capitalization of SHIB and DOGE reaching over $30 billion each in early 2022.

UPDATE (Jan. 3, 16:45 UTC): Updates with SOL's outperformance.

UPDATE (Jan. 3, 17:49 UTC): Updates with SOL's short liquidation data.