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Why Solana Is Up Today, Amid a Sea of Red With Major Cryptocurrencies

By Chris MacDonald – Dec 2, 2021 at 3:49PM

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The top cryptocurrency continues to push higher, despite market-related headwinds.

What happened

Solana (SOL -5.99%) is among the few winners in the crypto market today, seeing gains of 5.1% over the past 24 hours, as of 2:30 p.m. ET. This top five cryptocurrency by market cap has seen continued buying, despite weakness in the broader crypto market today.

A range of negative catalysts, from the discovery of the omicron variant in the U.S. to Federal Reserve tapering, have resulted in decreased demand for risk assets. However, investors appear to be diverting their risk-on trades to cryptocurrency tokens with perceived quality, such as Solana.

Person using phone and laptop to follow investments.

Image source: Getty Images.

So what

It appears the (arguably) subjective view of Solana's quality among digital assets is rather widely held. News that the Grayscale Solana Trust had been launched this week has curried favor among retail and institutional investors alike. This trust is expected to accumulate SOL over time, allowing accredited investors to participate in this trust via private placements.

Additionally, it was revealed this week that leading venture capital firms would be putting $4.3 million into a Solana-based metaverse project. This project, code-named Solice, is expected to compete against leading metaverse crypto plays Decentraland and The Sandbox

Now what

The prospect of additional capital inflows into Solana appears to be enticing for investors. Grayscale's move to officially add a Solana trust suggests that big money is looking to chase the returns of Solana, over higher-profile cryptocurrencies such as Bitcoin and Ethereum.

Additionally, the metaverse is a red-hot space right now. The fact that Solana's blockchain is being utilized by developers for new metaverse projects is very bullish for the argument that Solana's ecosystem is one of the fastest growing and most sought after right now.

Chris MacDonald owns shares of Ethereum and Solana. The Motley Fool owns shares of and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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