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Finbold

09/06/2023

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Solana would trade at this price if SOL hits its all-time high market cap

Solana (SOL) reached an all-time high price of $259.96 on November 6, 2021, as well as an all-time high market cap of $80.965 billion on the same date. Solana has a novel supply inflation schedule, with an...

Solana would trade at this price if SOL hits its all-time high market cap

Solana (SOL) reached an all-time high price of $259.96 on November 6, 2021, as well as an all-time high market cap of $80.965 billion on the same date.

Solana has a novel supply inflation schedule, with an Initial Inflation Rate of 8% that started in February 2021, a yearly Disinflation Rate of -15%, that will reduce SOL’s supply inflation to a fixed value called Long-term Inflation Rate, of 1.5% per year.

However, even with a controlled and diminishing supply inflation rate, Solana is still affected by its token’s inflation. Considering data retrieved by Finbold on September 6, with a circulating supply of around 408.949 million SOL, one Solana would be worth close to $198 — $61.96 (23.8%) less than its all-time high price in US dollars.

Solana Market Cap All-Time High on November 6, 2021. Source: TradingView
Solana circulating supply and SOL total supply.
Solana Market Cap All-Time High on November 6, 2021. Source: TradingView

Moreover, market capitalization is usually used to measure the market’s perception of value in a given asset, as well as its speculative demand in a given moment. This means that Solana constantly needs an increased demand to meet historical prices with a previously lower supply.

Solana price analysis

Meanwhile, SOL is trading at $19.79 at the time of publication, which would potentially offer the possibility for Solana investors to gain 900% for purchases made at this moment if this layer-1 blockchain native token ever meets previous demand.

SOL 1-year price chart. Source: Finbold
SOL 1-year price chart. Source: Finbold

Comparatively, the current price is -92.39% lower than the all-time high price.

Solana supply inflation

Solana does not have a capped maximum supply, meaning that new tokens will always be created at a programed rate, to be distributed to network validators according to their staked amount.

According to Solana’s documentation, the proposed yearly inflation schedule is illustrated in the following chart, considering both the Initial Inflation Rate (8%), the Disinflation Rate (-15%), and the Long-term Inflation Rate (1.5%).

Solana’s proposed supply inflation schedule. Source: Solana Foundation
Solana’s proposed inflation schedule. Source: Solana Foundation

Interestingly, the current yearly inflation rate should be somewhere between 5% and 5.5%, but the nominal staking APY is at 7.57%, according to Solana Beach Block Explorer. The staking APY varies according to the total staked amount of SOL, weighted by the current inflation rate.

Solana Validators stats. Staking reward APY. Source: Solana Beach
Solana Validators stats. Source: Solana Beach

Besides the circulating supply and the infinite maximum supply, Solana also has a vested (or locked) supply of 147.751 million SOL, by press time. These vested tokens will be released over time by Solana Labs, Solana Foundation, team members, and private investors, also impacting the token’s value through inflation (or monetary expansion).

How other cryptocurrencies would perform according to their all-time high market cap?

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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