Solana (SOL) bulls have largely ignored its overvaluation risks equally the blockchain asset goes after some other milestone price level.

The SOL/USD substitution rate well-nigh reached $200 on Tuesday equally investors continued to treat Solana as a long-term competitor to Ethereum, the earth's leading smart contracts platform.

More bullish testify came on Monday afterwards Sam Bankman-Fried, CEO of crypto derivatives platform FTX, announced Solana'south integration into FTX's upcoming nonfungible token (NFT) market.

On Monday, Bankman-Fried revealed that the new market place would enable NFT creators and owners to trade their digital arts cross-chain using Solana and Ethereum. The platform would also make it possible to merchandise NFT collections from rivaling market OpenSea on FTX.

The NFT marketplace went live on Monday and is hosted by FTX.The states, a U.s.a.-regulated cryptocurrency exchange backed by FTX. That enables United states users to mint and trade NFTs via FTX.

NFT boom backside Solana rally

NFTs exist on blockchains, the public ledger technology that keeps runway of who owns the digital assets. Therefore, performing tasks such as minting an NFT token or processing digital nugget transactions entail a fee.

Nearly NFT-related transactions have place on Ethereum, fifty-fifty though the network suffers from higher congestion and inflated gas fees. Information fetched by EtherScan shows that Ethereum's gas fees reached their highest levels since May last week.

"As NFT activeness commands ecosystem attention, gas prices have risen to daily levels that price out many retail traders," Luke Posey, a researcher at blockchain analytics firm Glassnode, wrote in a notation on Wednesday.

Ethereum gas fees (in Gwei) in the last three months. Source: YCharts

Solana's public base-layer blockchain protocol proposes to do away with Ethereum's operation bottlenecks. In addition, its lowered gas fees have made it an emerging player in the NFT industry, backed by the launch of dedicated digital collectibles marketplaces such as Solanart, DigitalEyes and its integration into music streaming platform Audius.

Major players in the crypto space have recognized Solana's potential against Ethereum. In June, Bankman-Fried-backed Alameda Research led a $314-million funding round for Solana, which was also funded by venture capital firm Andreessen Horowitz, Polychain Uppercase and CoinShares.

SOL to $500?

Greg Waisman, co-founder and chief operation officer of payment network Mercuryo, envisioned exponential growth for the Solana ecosystem based on its growing adoption amid the decentralized finance (DeFi) and NFT infinite.

He believes Solana'southward boom is similar to Ethereum and Binance Smart Chain, adding that it would heave SOL/USD exchange charge per unit to as high every bit $500 in the 2d half of 2022. He said:

"Solana is potentially a $500 digital coin, and the cost growth of Solana in contempo times points to the capacity of the token to receive enough boost to hit this marker before the end of H2 2022."
SOL/USD daily price nautical chart. Source: TradingView

On the flip side, analysts at JPMorgan Hunt warned clients nearly overvaluation risks in the altcoin and NFT infinite, stating that the recent rally is "more likely to be a reflection of barm and retail investor 'mania' rather than a reflection of a structural uptrend."

Related: JPMorgan sounds alert over 'frothy' crypto markets after August nail

On Tuesday, SOL/USD'due south quarter-to-date returns reached a little over 450% as it established its all-time loftier at $196.78. Since and then, the pair has already pulled back as traders take profits.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading movement involves chance, you should conduct your own research when making a determination.