Solana continues to underperform as it explores new lows below $10 for the first time since February 2021, but it has the potential to bounce back.
The crypto market experienced some serious setbacks in 2022, as the bear market continues to intensify. Many fundamental factors led to the downtrend that the crypto market is currently in.
To illustrate, the war between Russia and Ukraine, the fall of the Terra ecosystem, and more recently, the collapse of FTX, are only some of the reasons why the market is down today.
One of the worst-performing cryptocurrencies of 2021 is Solana (SOL). First of all, the network showcased a huge vulnerability to hackers. The biggest hack this year was a $200 million hack, which led to more FUD for SOL.
Perhaps the biggest factor of them all is the FTX collapse. Solana had quite the exposure on FTX. That is because they sold around 50 million SOL to FTX. Because of that, SOL experienced a 70% dip in price in November alone. Anatoly Yakovenko (co-founder of Solana) argued the opposite.
While SOL managed to have a 35% correction as a follow-up to the dip, it is still declining in the daily chart as it is currently exploring new lows.
Looking at its all-time high, the price of Solana is down by 96%. That is quite frightening to think about for the Solana community. They have tried their hardest to battle all the fundamental factors that were in a way inevitable.
SOL is now being compared to the likes of LUNA and FTT when it comes to its price movement. Both prices of LUNA and FTT were a result of major network collapses.
While it is true that Solana has lost its momentum and is unlikely to recover any time soon, SOL proponents are still optimistic that it can bounce back.
Can SOL Bounce Back?
The Solana community is optimistic that SOL can bounce back. Many relate the recent price movement of SOL with the movement of ETH in 2018. In 2018, Ether went from $1,400 to $80 in less than a year, which meant a 95% decrease.
Many suggested back then that ETH would go to $0. One of the reasons for this is that many considered ETH as highly centralized when compared to its main rival, Bitcoin (BTC), which is fully decentralized.
Nonetheless, ETH went as high as $4,900 in the 2021 bull run, suggesting that ETH bounced back despite the FUD of 2018.
Similarly, Solana has been subject to huge controversy, especially after the FTX collapse. When compared to its all-time high in 2021, SOL is down by almost 96% in just 420 days. When looking at the price movements of SOL in recent months with ETH’s in 2018, one could argue that there is a resemblance.
Here is what Ethereum’s founder Vitalik Buterin had to say about Solana’s future:
Hence, while many argue that SOL will “die” soon and will not survive until the next bull run, history may suggest otherwise. Of course, SOL is nowhere close to having the influence that ETH has. The latter remains the biggest altcoin in the market, and it is likely to stay like that in the upcoming years.
Technical indicators also demonstrate huge bearish momentum. Nonetheless, extreme fear and a weekly RSI in the oversold region could suggest that SOL may eventually bounce back in 2023.
It is difficult to estimate what will happen with the ecosystem, considering that 90% of SOL’s developers have left. But Solana surviving until the next bull run is quite likely, given that the network is still operating smoothly.