Traders are piling into BONK, boosting its price by triple-digits in the last 24 hours and possibly hinting at a trend reversal in Solana price.
Bonk, a meme token modeled after Shiba Inu (SHIB) that launched on Dec. 25, is skyrocketing and some traders believe the token’s trading volume is potentially driving Solana’s (SOL) price up. Over the past 48 hours, SOL price has gained 34%, and in the past 24 hours, Bonk has climbed 117%, according to data from CoinMarketCap. While the wider crypto market remains suppressed, traders are hoping that Bonk could present new opportunities during the downturn.
According to the project’s website, Bonk is the first dog token on the Solana blockchain. Initially, 50% of the token supply was airdropped to Solana users with a mission to remove toxic Alameda-styled token economics. The airdrop resulted in more than $20 million in trading volume according to the Solana decentralized exchange Orca.
High yield returns
Liquidity providers (LPs) stand to benefit from interacting with Bonk, and on Jan. 4, LPs are earning over 999% APR, which is much higher than the popular SOL/USD Coin (USDC) pairing.
While high yields do not always stay high, the current rates show large market demand for Bonk. In addition to the increase in demand, Bonk also burned 1 billion of supply on Jan. 3.
WE BURNED 1 BILLION BONK TOTAL TODAY pic.twitter.com/XDHP2YzXzu
— degen poet (@degenpoet) January 4, 2023
Solana (SOL) bounces alongside Bonk
Blockchains like Solana benefit from increased usage. After the FTX collapse, Solana saw multiple projects leaving the ecosystem. On Jan. 4, Solana saw an 18.6% increase in 24-hour fees and a 15.8% increase in 24-hour daily active users.
In addition to fees and daily active user increases, SOL price rallied above $14 on Jan. 4 for the first time since Dec. 14. Some crypto market participants are attributing Bonk’s growth to Solana’s price action.
Solana is up 33% in two days as newly launched dog coin BONK gains community hype pic.twitter.com/XusvGHg24X
— Joe Weisenthal (@TheStalwart) January 3, 2023
While Bonk is merely a meme token, the increasing demand is a positive sign for the Solana blockchain. This is a sign that Vitalik Buterin may get his wish that Solana gets a “chance to thrive.”
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.