Recent comments from the Federal Reserve have led to strong sales of cryptocurrency investments, and Solana has been hit harder by the withdrawal than the rest of the market. Solana has lost about 16.5% in the past week, according to Coingecko.
Cryptocurrencies are sometimes referred to as a decentralized investment option that can provide protection against stock market volatility. However, recent transactions suggest that digital signals are hardly immune to macro pressure. While major cryptocurrencies have yielded strong results in recent years (and even more Solana plus 6,870% in the last 12 months), recent Fed comments indicate a tighter environment for growth-oriented investments and it is clear that speculation has created downward pressure on prices.
The SOL signal rose sharply in 2021 thanks to speculative momentum and growing interest in the Solana blockchain ecosystem. Solana provides a network for executing smart contracts and building decentralized finance (DeFi) applications, and the speed of their transactions has helped generate excitement among developers and investors.
If Solana is falling more today than the market it is also because of this parabolic rise in 2021. Holders of Solana selling today are still very positive in terms of their earnings. In fact, Solana is easier to sell for cash than any other cryptocurrency today.
For comparison, the Ethereum blockchain is currently capable of processing about 13 transactions, while Solana can process up to 50,000 transactions per second. Ethereum remains the mainstay for the creation of cryptocurrencies and DeFi applications, and its market capitalization is approximately $ 382 billion. Meanwhile, Solana now has a market capitalization of about $ 43.5 billion.
The Solana token may continue to climb if the underlying network continues to deliver the benefits of transaction processing and attract developer involvement, but investors should keep in mind the risk dynamics. The SOL token has already posted strong gains, and the overall macro background could create a more challenging backdrop for cryptocurrencies this year.