Why Solana Was Shooting Higher on Monday

What happened

It was a happy belated New Year for besieged token Solana (SOL 12.56%). A spike late Sunday night saw its price move above the psychologically important $10 level. It has stayed there since — as of late afternoon Monday the cryptocurrency was trading nearly 13% higher across the preceding 24 hours. The token’s recovery was due to the action of an unlikely rescuer.

So what

In a somewhat holiday-induced delay, many investors were reacting to a tweet posted by Ethereum (ETH 1.01%) founder and leading light Vitalik Buterin. Last Thursday afternoon, Buterin wrote that “Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future.

“Hard for me to tell from outside, but I hope the community gets its fair chance to thrive,” he added.

That’s notable for two big reasons. First, Ethereum and Solana are competitors, with the latter being renowned as a top “Ethereum killer,” for its relative speed and efficiency in handling functionalities such as smart contracts. Secondly, this is apparently the first time that Buterin has expressed support for his rival. He remains a well-respected figure in the crypto world, so any backing from him is meaningful and can have quite an impact.

Now what

Investors might also believe that Solana hit its bottom, following the near-collapse in price in the wake of the FTX collapse. That was understandable, as FTX and its close affiliate Alameda Research were among the top institutional holders of Solana, and FTX founder Sam Bankman-Fried was very publicly bullish on the cryptocurrency.

Solana certainly isn’t out of the woods yet, as it’s still unclear how damaging the long-term effects of that FTX/Alameda association are going to be. But some clearly feel it’s now well undervalued, so perhaps we might see another price rally before long.

Eric Volkman has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.