Solana (SOL) price surged 4% on Thursday, August 24 after Shopify added support for USDC via Solana Pay. Analysis of the derivatives market data shows that investors are taking a bullish stance on the future price development of SOL.
Will the Shopify integration push Solana’s rating and take Dogecoin’s (DOGE) ninth place in the top 10 crypto ranking? On August 23, e-commerce giant Shopify announced the integration of the USDC payment method via Solana (SOL) Pay.
Shopify reportedly has 4.2 million registered online stores and 2.1 million daily active customers. Hence, crypto enthusiasts anticipate that this groundbreaking integration could support the SOL price and deepen crypto adoption globally.
How will the Shopify payments integration affect the price of Solana (SOL)?
Within 12 hours of the announcement, crypto traders flocked to SOL, triggering a nearly 4% price surge. This has pushed Solana’s market cap towards the $9 billion mark, just behind Dogecoin (DOGE).
Solana (SOL) approaches Dogecoin (DOGE) | Crypto Rankings, August 2023. | Source: leg crypto
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Market capitalization is a financial metric that represents the overall rating of a cryptocurrency’s circulating supply. Cryptocurrency market cap is determined by multiplying the current price of the token by its total circulating supply.
The Shopify integration has significantly boosted Solana’s estimated market valuation. As shown above, SOL’s market cap is now approaching that of Dogecoin, standing at around $8.9 billion at press time.
Judging by the initial reactions from crypto traders in the futures markets, it is only a matter of time before SOL DOGE courts.
Solana short traders feel the crisis
The Shopify announcement caused the SOL price to rise 3.5% from $21.27 to $22 as of Thursday morning. The positive market momentum caused Solana short sellers to close their positions as quickly as possible.
The chart below shows that short traders suffered over $1.4 million in liquidations between August 23 and midday on August 24.
Short traders borrow and sell assets (such as stocks or cryptocurrencies) in anticipation of the asset’s price falling. Their goal is to buy back the assets at a lower price and return them to the lender, pocketing the difference in price as profit.
A short liquidation event is triggered when the asset’s price increases rapidly, resulting in losses that exceed the value of the collateral or “margin” posted by the short trader.
The chart above means that investors who were short/negative positions on the Solana price have suffered losses of more than $1.85 million in the last 24 hours. Such large liquidations in a short period of time increase the risk of a short squeeze.
To avoid further losses, the Solana short traders could try to buy more SOL tokens to cover their positions. This can increase buying pressure and lead to an even faster SOL price increase.
If a short squeeze kicks in, Solana’s price valuation is likely to outperform Dogecoin’s market cap in the coming weeks.
Investors are bringing fresh funds into the Solana ecosystem
Additionally, crypto investors have started pumping fresh funds into Solana Futures Markets to take advantage of the potential benefits of the Shopify collaboration.
The chart below shows that SOL’s open interest is up 24% after nearly a week behind, to hit $270 million on Aug. 23.
Open interest summarizes the total value of active derivative contracts for an asset. An increase in open interest is a bullish signal that indicates significant capital inflows.
Notably, the timing of this 24% surge in the Solana futures market suggests that most investors are reacting positively to the Shopify integration.
If the uptrend in open interest continues, the upward pressure could see the Shopify integration push Solana’s price higher in spot markets in the coming days.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, however, market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions.
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