Solana had a wild run in the third quarter of 2022 and took its biggest hit in November when it fell over 50%. SOL price dynamics are taking the heat off the crypto industry; as market sentiment recovers, we can anticipate it to recoup losses.
Will SOL go up? To better answer this question, we shall explore the token’s market sentiment, ecosystem developments, and price dynamics in the following sessions.
Solana contagion by FTX
It is now public that the collapse of the FTX exchange and its CEO Sam Bankman-Fried negatively impacted market sentiment. SOL, FTT, SRM, MAPS, and OXY were cryptocurrencies closest to FTX and took the biggest hit. The coins were backed or created by SBF, FTX, or Alameda research.
On the fateful week, SRM fell by 69%, while MAPS and OXY fell by 78% and 46%, respectively. FTT, the exchange native token, lost over 90% within the same time frame.
The coin was intertwined in the fiasco when the company’s balance sheet revealed that the company held substantial amounts of SOL. At the time of the collapse, FTX had $8.9B in liabilities, $900M in liquid assets, and $5.5B less liquid assets.
Less liquid assets consisted of SRM valued at $2.2 billion, SOL at $982 million, MAPS at $616 million, FTT at $544 million, and others with direct ties to FTT. The ensuing bear run devalued most of these assets significantly.
FTX later filed for bankruptcy, and liquidators now hold the coin reserves. Analysts suggest that the coins could remain locked for over ten years until the chapter 11 bankruptcy proceedings are complete.
Onchain stats by Solana compass indicate that Alameda has a locked stake of 48,671,518 coins which constitute 65.4% of the entire stake. At press time, the coins were valued at $12.78 million and will continue to accrue rewards until they unlock from the stake. The remaining funds are probably in possession of Alameda Research.
FTX heavily supported the Solana ecosystem. For instance, FTX built the Serum decentralized exchange on the Solana blockchain.
On Sunday, 6 November, the coin reacted to the collapse of FTX by falling from a high of $37 to a bottom of $13 four days later.
Solana’s recent developments
Despite the FTX hiccups and downtimes, the Solana ecosystem has continued to show promise in terms of performance and scalability. The network achieves finality at 400 milliseconds with transaction costs of less than $0.01.
In June 2022, Solana announced their new product Solana Mobile named Saga. The project is making progress with the specs already released to the public.
The phone will come with a Solana sApp store with zero fees on in-app purchases, subscriptions, and sales. Saga sales will begin in 2023, and you can place a pre-order today.
Recent partnerships include Coinledger. The Coinledger app analyses your Solana transactions to calculate profits/ losses and provides automatic tax reporting.
On 10th November, Amir Haleem, founder of Helium, hinted at their transition to the Solana blockchain. Helium is a platform that provides decentralized wired infrastructures to institutions.
Solana’s ecosystem developments and its pricing have not been in tandem. For the majority, SOL’s price has traded according to market sentiment. The bear market has been tough on the coin and so far dropped 94% from its all-time high of $260.06 on November 6, 2021.
Through chart analysis, we can deduce positive price momentum from the MACD histogram; the MACD line has broken above the signal line, suggesting prices will rise higher. The Relative Strength Index shows SOL recovering from its oversold position on November 21st, with plenty of room for price movement upward.
Also, read SOL price prediction 2023 -2031.