Disclaimer: The datasets shared in the following article have been compiled from a set of online resources and do not reflect AMBCrypto’s own research on the subject.
Messari recently posted its latest report highlighting Solana’s (SOL) performance in the first quarter of the year. One of the most notable takeaways was its market capitalization growth, which increased by over 100% quarter-over-quarter.
Meanwhile, SOL has lost 18% of its value within a week, though it has been trying to regain its value.
This year has seen significant price volatility for Solana, but it has been overwhelmingly positive, with the price increasing by more than 100% since the start of Q1.
However, the Solana network has also been plagued by network outages and exploits on occasion, which has undoubtedly irritated investors.
Read Price Prediction for Solana [SOL] 2023-24
Solana has remarkably recovered from the losses it posted in November and December 2022, especially for a multibillion-dollar market-cap asset. How it is able to escape the long-term downtrend will determine how well it performs in the next few months.
Its increasing popularity can be assessed by the fact that popular American comedian and television host Steve Harvey also joined the bandwagon. He did so when he changed his Twitter profile to that of a Solana Monkey Business NFT in September last year.
American singer Jason Derulo tweeted about his excitement for the token last year, confirming that he had bet on Solana.
We recently witnessed the failure of the crypto-friendly Silicon Valley Bank (SVB) that also led to the collapse of Silvergate and Signature banks. It affected the crypto industry also, including Solana, as its price collapsed nearly 15% to $16. But the token has since then recovered well enough.
At press time, SOL was trading at $22.37, with a market cap of $8.8 billion. It was the 10th-largest cryptocurrency in the world at this time, with a daily trading volume of $404 million, down 48.78%.
Source: SOL/USD, TradingView
In early August 2022, thousands of Solana accounts were drained. The Solana Foundation, however, told the Financial Times that it “does not appear” that the exploitation had affected its core infrastructure, but rather was caused by a bug “in software used by several wallets popular among Solana users.”
Cryptocurrency VC fund Cyber Capital’s Justin Bons had tweeted that Solana has far too many red flags such as multiple downtimes.
The Solana network is currently one of the best places to explore NFTs and DeFi apps. Billionaire entrepreneur Reid Hoffman, better known as the co-founder of LinkedIn, announced on Twitter on July 2022 that he was releasing a series of Solana-based NFTs based on images created using OpenAI’s DALL-E 2 AI software. He added that he would auction the first piece starting on Magic Eden, the largest Solana NFT marketplace. Magic Eden is the leading NFT marketplace on Solana. Its focus on the artistic community, availability of simple tools, and the diversity of tokens created and offered to make it a force to be reckoned with in the NFT community.
Essentially, Solana has emerged as a paradigm for other blockchains looking to grow.
Why these projections matter
Today, Solana is one of the fastest-growing cryptocurrencies in the market with 160 billion transactions so far. Average cost of a transaction on the platform is $0.00025, making it one of the most economical currencies in the crypto universe.
The Solana Foundation has announced that a total of 489 million SOL tokens will be released in circulation. Currently, there are a little under 300 million tokens already in circulation.
The Solana blockchain has eight features, including PoH, Cloudbreak, and Sealevel. Thanks to its high speed and low cost, Solana has successfully attracted the interest of both retail and institutional investors across the globe. Solana promises its customers that there shall be no increased fees and taxes. Its low transaction fees don’t compromise either the scalability or processing speed of the protocol.
What is unique about the Solana blockchain is that it is the first platform to adapt the “proof of history” mechanism for crypto mining. A 2017 white paper published by Yakovenko detailed a timekeeping method that he called proof of history. The paper argued that the long time needed to reach a consensus over a transaction on conventional blockchains such as Bitcoin and Ethereum has acted as a barrier towards the scalability of these projects. To counter this challenge, the paper suggested a new method of consensus – proof of history – that creates a ledger recording of events as and when they occurred.
The validation process on Solana is done through an innovative combination of proof-of-history and proof-of-stake consensus mechanisms, attempting to win over the twin issues of security and scalability as had been faced by the Ethereum network.
What is unique about the Solana blockchain is that it is the first platform to adapt the “proof of history” mechanism. Its innovative approach to technology has gained significant traction in the market. Ergo, investors must be well aware of its previous performance, current market sentiment, and future predictions.
In this piece, we shall closely observe the key performance parameters of Solana, with particular emphasis on its price, market cap, and volume. We shall also summarize the predictions of the world’s most popular and reliable analysts, in addition to the Fear & Greed Index to assess future projections.
Solana’s price, market cap, and other metrics
After an extremely successful performance last year, the cryptocurrency market began tumbling in 2022. From around $178 in early January, SOL’s price fell to as low as below $80 in mid-March. In early April, it breached the $135-mark before again continuing to fall lower and lower.
By the end of 2020, the market cap of Solana was only a little over $70 million. 2021 proved to be a dream run for the currency as its market cap continued to soar higher and higher, climbing as high as $77.99 billion on 6 November. When 2022 began, its market cap was $55.19 billion, following which it hit a low of $25.49 billion on 13 March.
Market conditions got better in April, briefly, before they plummeted yet again.
Messari’s James Trautman recently published a report that analyzed the state of Solana in the second quarter of 2022. With volatility prevalent across metrics in Q1, Solana completely crashed, in line with all the other cryptocurrencies in Q2. The macroeconomic conditions worsened for the industry as tighter regulations kept coming into place and we witnessed the $60 billion collapse of terraUSD and LUNA.
Revenue decreased by 44.4% due to bad network performance, and average transaction fees, in turn, decreased by 40.6%. In Q2, its P/S ratio was 847x. In comparison to Q1, its TVL also decreased by around 68%, similar to a ~70% fall in TVL across all the top 10 DeFi protocols.
The report also mentioned that Solana is one of the leading blockchains when it comes to NFT transactions. Currently, it is home to Solanart, Metaplex, and Magic Eden, among several other NFT marketplaces. Therefore, a rise in this asset class could conversely affect the price and volume of its native cryptocurrency as well.
Solana had risen more than 1,2000% since its inception in 2020, when it was trading for less than $1, by the time it reached its peak in 2021. It reached an all-time high of $258.93 on 6 December 2021.
How many SOLs can you buy for $1?
Solana Price Prediction 2025
We must understand that experts’ predictions vary a lot. Each analyst weighs upon a specific set of factors to forecast the market and different currency metrics. These analysts study the previous market trends as well as future speculations and then arrive at their predictions. It is therefore self-evident that market predictions significantly vary. Even then, unexpected technological and economic changes keep interrupting the market wildly, thereby influencing currency metrics.
Let us now look at what different crypto analysts have to say about Solana’s future in 2025.
A Changelly blogpost says that we are going to witness a bullish year for Solana in 2025. Its minimum and maximum prices of Solana in 2025 will be $60.93 and $70.82, respectively. On average, it will trade at around $62.62 in the said year.
DigitalCoinPrice is similarly optimistic about the future of Solana, predicting its maximum and minimum prices in 2025 to be $75.27 and $60.86, respectively. As per its analysis, Solana’s average price in the said year will be $74.37.
Solana’s 2030 Predictions
Predicting markets 8 years down the line is very speculative; it is anyway speculative even for a shorter period of time. Many noted crypto analysts and commentators have nonetheless forecasted Solana’s metrics for 2030.
The aforementioned Changelly analysis predicts an extremely bullish performance for Solana in 2030. SOL will be traded at the minimum and maximum prices of $405.89 and $494.92 respectively. On average, its price in 2025 will be around $417.50.
As far as 2030 is concerned, even DigitalCoinPrice is very bullish in its assessment. It predicts that the maximum and minimum prices of Solana in 2030 to be $213.98 and $201.05 respectively. The average price of Solana in the said year will be $204.85, the report predicts.
Panxora Hedge Fund’s Gavin Smith is of the opinion that,
“SOL is one of the leading contenders in the smart contract blockchain space. They are likely to be one of the chief beneficiaries if the Ethereum upgrades fail to deliver lower transaction fees.”
Conclusion
It wouldn’t be right to not mention the fact that the Solana Network is prone to outages and has been so for a while now. Will these outages continue and are they likely to have an impact on SOL going forward? Well, it’s perhaps too soon to say. According to Bitwave’s CEO, however,
“… keeping an eye on Solana, but it’s the only blockchain that regularly has major outages, which just isn’t doable for a financial technology.”
In fact, over 65% of Finder’s panelists believe Solana’s Network will continue to see more outages in the future.
Solana has nonetheless continued to implement solutions to enhance its network stability and reliability. It also focuses on expanding its market ecosystem, with the adoption of NFT marketplaces, EVM compatibility, promotion of Solana Pay, and the introduction of Solana Mobile. Today, it has gained currency among the decentralized finance (DeFi), non-fungible tokens (NFT) marketplaces, and gaming communities.
In August 2022, cryptocurrency wallet services provider Phantom launched the facility to burn tokens so that users could remain safe against fake non-fungible tokens (NFTs) sent by scammers.
That being said, it’s important to note that very recently, the Solana-based DeFi exchange Mango Markets was hit with a reported exploit of over $100 million through an attacker manipulating price oracle data in October 2022.
Soon after, the exploiter revealed his identity on Twitter, referring to his actions as “a highly profitable trading strategy.” Avraham Eisenberg explained his actions, saying that their “actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.”
Statement on recent events:
I was involved with a team that operated a highly profitable trading strategy last week.
— Avraham Eisenberg (@avi_eisen) October 15, 2022
Also, Solana’s move-to-earn application Stepn launched an NFT collaboration with La Liga soccer club Atlético de Madrid and crypto-exchange Whalefin, releasing 1,001 exclusive NFT soccer boots.
Solana’s blog post said,
“We’re still in the Wild West days of Web3. As the crypto ecosystem grows, so has the number of bad actors looking for ways to steal users’ funds. The rapid growth in popularity of NFTs has led to an increasingly prevalent method of attack for scammers – Spam NFTs.”
Investors should keep in mind that the financial market remains highly volatile. In particular, the cryptocurrency market is even more so. Neither individual nor AI-driven analysts can foresee unexpected forces, and their predictions can very likely go wrong. It is for this reason that you should conduct your research and invest sensibly.
The Solana Foundation recently released its latest Validator Health Report, which revealed vital statistics, such as the number of validator nodes and their distribution across the network. Its Nakamoto Coefficient was one of the report’s main takeaways. It stood at 31 for the Solana chain versus 1 for Ethereum. A higher Nakamoto Coefficient indicates that the network has many nodes and is thus more decentralized and safer.
At press time, the Fear and Greed Index of the broader market was flashing a ‘neutral’ signal to the community. Worth noting, however, this is likely to be updated to ‘Fear’ soon.
Source: https://ambcrypto.com/solana-sol-price-prediction-31/