The year has come to an end and 2022 was not great for cryptocurrency buyers. The leading currency Bitcoin closed the last trading day at about 16,500 dollars, about 65 percent below the closing price of the previous year and even 76 percent below the all-time high level since 2021.
SOL buyers see a 97 percent drop
However, the situation is more depressing for some altcoins. Things especially went downhill for Solana. On December 29, the SOL/USD rate hit a new low in 2022 just before the end of the year, falling as low as $8. That’s a 97 percent drop from the all-time high of just below $260 hit on Nov. 6, 2021, putting many investors who bought at the high prices near a total loss. Although the price struggled a bit at the beginning of the year and was quoted at around 11 dollars at the time of publication, it is still more than 95 percent below the all-time high.
What are the reasons for Solana’s demise? And maybe the current price is a unique opportunity to buy SOL before the price recovers? Kryptoszene.de explains the factors that caused the price crash and uses charts and price forecasts from analysts to analyze how the new year could develop for Solana.
A crypto bearer market pushes the price of SOL down
On closer inspection, 3 main causes of Solana’s accident can be identified. Reason 1 is the absolute bear market this year. The top cryptocurrencies Bitcoin and Ethereum, along with many other well-known tokens, have seen a sharp decline this year. Corrections between 70 and sometimes 80 percent hit almost all bases, with these few exceptions.
Of course, the economic framework, which was affected by the war in Ukraine, high inflation and rising interest rates, played an important role. However, the bottom line is that the bear market in 2022 was no stronger than in previous cycles. Bitcoin has seen declines of this size and even more after every bull market to date. Altcoins are naturally hit harder due to their higher volatility.
However, this can only partially explain the reduction in SOL, as it is noticeable that the course lost significantly more than comparable projects. From a top 5 cryptocurrency in 2021, Solana is now struggling to position itself in the top 20 by market cap.
Solana network too unstable
The second main reason here is the technological problems for Solana. Although the network can score with fast transaction times and relatively low fees, this seems to be at the expense of the security and stability of the blockchain. Over the past year, there have been several network outages that have not affected users. Because the claim that the crypto sector plays a dominant role also requires that the service works reliably and that the participants do not have to bother with it.
So far, however, Solana has failed to live up to this demand and has therefore suffered disadvantages when trying to act as a direct competitor to the Ethereum network. This is reflected in the concrete numbers analyzed by coindesk.com. According to him, the total value of claims used in decentralized finance (DeFi) protocols on Solana has fallen from more than $10.2 billion to just $210 million in a year – a 98 percent drop. With that, Solana is not even among the top 10 DeFi chains by total value locked on the network.
Some smart people tell me that there is a real smart developer community in Solana, and now that the horrible opportunistic money people have been washed away, the chain has a bright future.
It’s hard for me to tell from the outside, but I hope the community gets a fair chance to succeed🦾🦾
— vitalik.eth (@VitalikButerin) December 29, 2022
FTX Crash adds an additional cost to the price of SOL
Of course the use of Solana has also decreased due to the events surrounding the crypto exchange FTX, which brings us to the third cause of the Solana crash in 2022. The former CEO of FTX, Sam Bankman-Fried, was considered to be a supporter is a big part of the Solana network and has been accused by some of manipulating the SOL/USD price in 2021 for self-interest. As is now known, FTX and the hedge fund Alameda Resaerch were heavily invested in SOL and based their liquidity not only on the FTT token of the exchange itself to a significant extent on the SOL token.
Not only did the FTX crash take a lot of liquidity from SOL in one go, but all the positive publicity Bankman-Fried had for Solana ended or was even viewed negatively. A lot of confidence in the cryptocurrency has been destroyed and investors are now regretting buying SOL or selling their investments. For this reason in particular, the SOL course corrected more in 2022 than other cryptocurrencies.
SOL/USD Bottom Could Be Close – 1,200% Return on Buy?
However, the SOL/USD rate is expected to bottom (soon). This could benefit the price if the entire crop market ends. Many analysts assume that the price of Bitcoin will bottom out soon. In addition, the FTX and Sam Bankman-Fried factor will probably lose its effect on the price, as it has already had a lot of influence in the last few weeks. If the Solana network becomes more stable and reliable on a technical level in 2023, more users should regain trust and activities on the blockchain increase.
Technical chart analysis also shows that SOL/USD is still locked in a large falling wedge and recently held a key support line at $8. If SOL/USD manages to clear the current descending resistance line at just below $14, the price could see a huge breakout to the upside. Basically, the falling wedge is a bullish pattern that is more likely to break out to the upside. A decision on guidance is expected by January 25 at the latest when the formation reaches its endpoint. The technical price target could take SOL/USD higher above $150. That would be a price increase of more than 1,200 percent and could reward the purchase of SOL with huge returns.
Digital Coin Price’s price forecast for 2023 is also bullish. The analysts estimate that the price will rise to just below $29, which corresponds to an increase of more than 160 percent on the current price.
Fight out signs in pre-sale
Looking for a new investment for 2023? Then the new cryptocurrency Fight Out is worth a look. The project is dedicated to the future metaverse content and wants to secure the fitness market in virtual space. The pre-sale of the native token is currently underway. There is currently an attractive 50 percent bonus when you buy FGHT.
An offer that matches your criteria…
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