NEON Token Soars by 2000% in 3 Months. What Comes Next?
NEON, a token linked to the namesake project on the Solana blockchain, has seen a phenomenal increase of 2000% from October to December 2023, reaching a high of $1.74.
The asset has seen a nearly 300% increase since early December alone. NEON has become one of the best-performing tokens on the Solana blockchain, making it into the top 500 in market capitalization, as ranked by CoinGecko.
This piece will examine the growth drivers of NEON and assess the potential for further investment opportunities in the project.
Background
Neon was among the crypto projects that conducted a public token sale through Coinlist, the largest ICO platform. The token sale on June 8 saw 50 million tokens up for grabs. The Neon protocol itself is an EVM platform for crypto projects on the Solana network, enabling Solana users to deploy smart contracts in the Solidity programming language compatible with Ethereum.
The functionality of the Neon project. Source: neonevm.org
NEON's ICO price was set at $0.10 for investors. However, 99% of the token sale spots were reserved for a priority queue, accessed by those who joined Neon's Discord before the ICO announcement.
The OTC purchase price for such an account was between $300-$600, making the real cost of each coin during the sale approximately $0.20-$0.25.
Details of the NEON token sale on Coinlist. Source: coinlist.co
Based on its metrics and tokenomics, Neon was regarded as one of Coinlist's most promising projects, with a low initial capitalization, a modest fundraising goal, and no direct market competitors, creating a favorable environment for NEON's growth. However, the coin started to decline right after its listing, dropping below the $0.10 mark:
The trend of the NEON token following its listing on exchanges. Source: tradingview.com
Further complications arose with Coinlist's withdrawal issues, leading to a delay in token distribution. As a result, many investors were compelled to sell their NEON tokens at a loss.
What Led to NEON's Remarkable Growth?
NEON reached its all-time low on August 30, priced at $0.052 per token. Following this, the coin began an active ascent, further accelerated by the upward trend in Bitcoin (BTC). This uptick in BTC led to a surge in demand for popular altcoins, including Solana (SOL), which itself saw a 300% increase from October 15 to December 20.
The correlation between SOL and its Solana-based counterpart NEON propelled NEON to a significant market capitalization of $90 million:
Correlation of NEON and SOL price movements. Source: tradingview.com
Key factors that significantly influenced NEON's explosive growth include:
- Limited availability of coins for sale. Apart from ICO participants on Coinlist, the token was scarcely held by others, as indicated by its tokenomics. Most partners and investors were subject to a lock-up period of over a year;
- Small market capitalization;
- Lack of similar offerings within the Solana ecosystem;
- Overall positive trend in the cryptocurrency market.
Challenges Facing the Project
A comprehensive assessment of the Neon project also highlights certain drawbacks that might impact its price negatively:
- High volatility, deterring new users and potentially affecting liquidity and trading volumes;
- Upcoming token unlockings. Six months have passed since the listing, and in another six months, investor groups will receive a certain number of tokens, unlocked for sale in the open market.
- Low TVL. Despite the rising Solana ecosystem, only $1.13 million was locked in the Neon network at the time of writing, a minimal amount compared to other projects;
- If Solana or Bitcoin undergo corrections, NEON's price could quickly fall by 60-70%.
NEON's network TVL. Source: defillama.com
Will NEON Continue Its Upward Trend?
It's essential to consider both the project's fundamental aspects and technical analysis. Technically, buying NEON in the spot market seems promising, particularly in the $0.7-$1.0 price range:
NEON’s chart showing a potential buying zone. Source: tradingview.com
Given the range of crypto projects in the Solana ecosystem, NEON has the potential to increase its market capitalization to between $150-$200 million. However, this hinges on BTC avoiding a significant correction that could negatively impact SOL.
Monitoring the TVL of the NEON network is also crucial. If locked funds and the number of projects on the network steadily increase, it could further boost NEON's upward trend. Additionally, investors should watch for tokens of projects launched on Neon, such as Moraswap, Sobal, zkUSD, among others.
