Solana is currently one of the best performing cryptocurrencies in the market, with gains exceeding 90% in 30 days, 133% in 14 days and 62% in seven days. In just a few weeks, Solana’s value soared to trade above the $20 mark, after hitting a low of $8.01 in December.
Rumors of the end of the Solana ecosystem may be exaggerated
An article by Messengers, a leading crypto analytics platform, has shed light on the questions surrounding the possible threat of disappearance of the Solana ecosystem. It cannot be denied that the blockchain has suffered greatly due to its close relationship with the bankrupt exchange. FTP extension. Nearly all value locked (TVL), transactions and token value in the ecosystem was backed by FTX and its subsidiary Research Alameda.
However, the Solana ecosystem is still as strong as almost every other layer 1 protocol and still has a network of builders, an ecosystem of apps, and a financial war chest. Solana saw investors flocking over the Christmas holidays, buoyed by these elements.
Also, the role of Vitalik Buterin, co-founder of Ethereum in the Solana turnaround, is not to be overlooked. In fact, the resurgence of activity in the ecosystem began to intensify after Buterin tweeted his support for Solana and his community.
Another factor in Solana’s price surge is the launch of the first meme cryptocurrency, BONK, on the blockchain in late December. Its market cap had exploded to $200 million, before gradually falling back to $55 million at the time of writing.
To a large extent, the upward price trend of Solana has largely been influenced by speculation, however, the network is strong with a thriving app ecosystem.
Solana’s key fundamentals are trending positive
Contrary to popular opinion, the number of daily active addresses transacting on the blockchain has remained relatively unchanged over the past two months following the FTX incident.
In recent weeks, that number has tripled from previous levels seen before FTX went bust. Will these levels be maintained in the short and perhaps medium term? Either way, it shows that Solana is on a positive trajectory given the impact of the exchange crash on the protocol.
Messari also points out that the number of transactions and active accounts (monitoring of paid accounts only) is also increasing. It is possible that speculation due to BONK’s launch may have fueled this trend, however, these indicators suggest that user activity has never actually decreased.
Network Outages: A Bygone Era on Solana?
The Solana blockchain experienced a series of outages in 2022, which greatly concerned investors. For just over three months, the network has not suffered interruptions and Solana seems to be working properly.
The updates prepared by the developers were distributed without difficulty. At the same time, the ecosystem’s local fresh market (local priority tax experiment) has proven effective: gas tariffs have remained relatively low, as have base rates, except for a spike likely due to increased BONK-related activity.
Comparing Solana to other Tier 1 blockchains is difficult, mainly due to differences in fundamentals and price. Additionally, Solana’s market cap is significantly smaller than its peers such as Ethereum and Cosmos when evaluating metrics such as active users, stablecoin volume, and blockchain transactions.
Moving forward, Solana’s price could continue its upward trend, supported by key user adoption mechanisms such as Neon, Solana’s mobile stack, and Solana Saga, which is expected to launch in 2023.
A slight break in the Solana price increase
Solana’s price has dropped slightly from $24.00 to $23.50 at the time of writing. The altcoin has cleared key hurdles in recent weeks, and the $25.00 zone is likely next for SOL.
The MACD indicator (Moving Average Convergence Divergence) is pegged in a bullish position as it crosses above the midline. A buy signal seen in the new year is still intact, confirming that the buyers are in the driver’s seat.
If the price of SOL continues falling, it should not drop significantly below $20.00 as the ask zone at $19.45 near the 200-day EMA (in purple) would dampen buyers and it would pave the way for a rebound.
The path of least resistance is likely to stay higher if the 50-day EMA (in red) remains above the 100-day EMA (in blue). A price above $25.00 would entice more buyers, including institutional investors, to reconsider Solana, allowing SOL to head towards $100.
Interested traders can buy Solana and take advantage of the rally which should reach $100 in a few months. However, investors may want to look to Meta Masters Guild (MEMAG) for its better risk-reward potential. For more details about MEMAG, follow the link below.
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