The recent collapse of the crypto behemoth FTX has triggered many consequential events, devastatingly impacting the overall market. Every coin has faced the heat of the recent market volatility, irrespective of its type or scale.
Besides, it’s no surprise that even the Solana cryptocurrency lost about half its value in the wake of these recent developments. Given enough time, the crypto market is expected to make bounceback from its most volatile phase.
So despite all the challenges in the market, Solana crypto still has the potential to bounce back. Or does it?
Continue reading to get better clarity on the situation and make an informed investment decision in 2023.
Solana (SOL): An Insight Into Its History
Anyone familiar with the working principle of cryptocurrencies must have heard about the proof-of-work (PoW) and proof-of-stake (PoS) consensus mechanisms. Both these mechanisms are common among most cryptocurrencies available in the market.
On the contrary, Solana leverages a distinct proof-of-history (PoH) mechanism. This ensures the Blockchain facilitates quick operations without compromising on decentralization or security.
Anatoly Yakovenko, with his colleague Greg Fitzgerald, created Solana in 2017, marking a new revolution in the crypto industry. The primary intent behind this idea was to provide people with an open-source project that offers great performance without needing permission.
SOL Is Next In Line To ETH In Terms Of Competition
Solana is one of the primary competitors of Ethereum, with the potential to process 2000 transactions in a second. Besides that, affordability is another excellent trait of Solana since its average fee is less than $0.00025. In addition, Solana covers several different protocols that focus on different areas.
However, the recent Ethereum merge marking the network’s transition from the proof-of-work (PoW) to proof-of-stake (PoS) is creating more issues for Solana. This transition helped Ethereum boast the potential to facilitate up to 100,000 transactions every second.
Another concern about Solana is its issues with network outages. In March and April this year, Solana suffered nine network outages, and seven of those outages left a significant impact on the crypto. Another update came from Solana’s website in late May, showing the Blockchain fell about 30 minutes behind wall clocks due to the longer-than-normal block times. Again, this did not impact the performance of the cryptocurrency, but this might have affected the staking rewards on the network.
SOL’s Performance So Far In 2022
It is no secret that 2022 has been a struggling year for Solana (SOL). But the token suffered a massive hit on the 26th of May 2022. The prices fell from $47.98 on the 25th of May 2022 to $43.49 on the 26th of May 2022 to just $40.98 on the 27th of May. The collapse of Terra UST and LUNA tokens was the initial trigger that brought SOL’s prices below the $50 mark.
This was followed by another outage on the 1st of June, bringing the token’s price to a low of $38.43 the following day. Further increasing volatility in the crypto market brought SOL’s prices to a low of $31.06 by the end of June.
The prices again rallied to $47.10 by mid-July but were unable to breach the $50 mark. A relative stagnation followed this until collapsing to $12.51 by the 9th of November. After that, prices increased a little, reaching $18.81 on the 10th of November and falling to $15.51 on the 11th of November following FTX’s filing for bankruptcy.
As of the 29th of November, Solana (SOL) has a market value of $13.57 with a market cap of $4,925,071,290 and a 24-hour trading volume of $329,487,776.
How Did The FTX Collapse Play Out For Solana (SOL)?
It is no secret that the collapse of FTX has adversely impacted Solana’s overall valuation (SOL). Moreover, after Binance pulled out from the FTX takeover deal, it further resulted in a 70% decline in Solana’s valuation.
FTX’s CEO Sam Bankman Fried, together with the entire FTX and its subsidiaries FTX US and Alameda Research, has filed for bankruptcy.
On 14th November 2022, Solana admitted that it has assets worth $1 million stuck in FTX. Of course, this is small and represents about 1% of Solana’s total assets.
As of 6th November, Solana had 134,54 million Serum (SRM) tokens and FTT tokens worth $3.43 million. This was the day FTX suspended all withdrawal services, and Solana even had an investment worth $324 million in FTX shares.
According to analysts from DeFiLlama, assets worth $279 million were locked in the Solana ecosystem as of the 29th of November. This figure came down from $10 billion in November 2021 and $1 billion as of the 6th of November this year.
Another important thing worth noting here is Alameda Research was also one of the most prominent investors in Solana. A report from CoinDesk suggests FTX has invested over $1 billion in SOL. This means Alameda Research still held about 48.6 million SOL staked and locked. This represents 65.1% of all locked stakes in Solana. But other reports suggest these coins will be in the liquidators.
Solana (SOL) Price Prediction For 2023
Judging Solana’s price can be challenging. However, if we have a look into the suggestion by different experts, there are better chances of getting an idea of the token. According to experts from Gov Capital, the prices will reach $232.87 by the same time next year.
On the contrary, experts from WalletInvestors are more optimistic about SOL’s performance in 2023. Their predictions indicate a declining trend that will take the token’s prices to a low of $1.67.
However, looking at the price movements and the market’s response to the token, we expect it to average around $28 by 2023. This is a strong indicator of a favorable market in the coming months.
Note All the predictions on our website result from detailed analysis of the token’s past price movements. However, considering the market’s volatility, SOL could go sideways or dip if it cannot support its retest. Therefore, invest only after a detailed analysis of the token.
Solana has been a potential project with significant positive uptrends in its price movement history. However, investing in cryptocurrency is always challenging, as many influencing factors are at play. So keep in mind the present updates and the future potential of the token.
Besides, you could also refer to its competitors to get a better idea of the market and its movements. Lastly, since most predictions for Solana (SOL) indicate positive outcomes in 2023, the chances of Solana cryptocurrency surging next year are relatively high. Stay invested!