Solana (SOL) has plunged below $10 for the first time since February 2021 as the token continued to witness a steep decline over the past week. The cryptocurrency has shed nearly 94% of its value since the beginning of 2022. Will SOL be able to survive the coming year?
Touted as the “Ethereum killer”, Solana (SOL) has experienced a rough year, so far. The Solana network has suffered brutal losses throughout the year with SOL tanking almost 95% since the beginning of 2022. The downtrend was exacerbated after the collapse of crypto exchange, FTX. The digital asset seems to have been hit hard following the bankruptcy of Sam Bankman-Fried, the disgraced founder of FTX and his Alameda Research hedge fund, which had backed the token.
Although, Solana (SOL) was one of the top-performing crypto assets at the beginning of this year, trading around the $133 mark in April, the token failed to hold the momentum giving away to several network outages and the collapse of Terra and FTX.
Solana Takes a Tumble
According to CoinMarketCap, Solana (SOL) is down more than 6% in the last 24 hours, currently trading at $9.40. SOL has dipped below the $10 mark for the first time in two years since 2021. The digital asset sank almost 23% over the past seven days as the FTX implosion continues to reverberate across the crypto ecosystem.
SOL was one of the worst-hit tokens after the FTX collapse, falling from $36.9 before the FTX bankruptcy to the current price. Furthermore, SOL has dropped more than 51% since the frenzy around FTX began unfolding on November 2. In the same period, Bitcoin (BTC) has declined 17.6%, while Ethereum (ETH) has fallen about 21.3%.
Reasons for the Fall
It’s just the beginning. pic.twitter.com/F3vxzXQAOy
— Frank III (@frankdegods) December 25, 2022
Market experts have pointed out several other factors that have decimated the price of Solana (SOL). The Solana network is the second largest NFT ecosystem globally. However, of late, many high profile projects and developers have signalled to abandon Solana and wished to migrate to other networks.
Recently, DeGods and y00ts, two of the biggest NFT collections on Solana, announced their imminent departure from the ecosystem. The migration of these major NFT projects could trigger further ecosystem departures, especially if SOL price valuation does not improve in the coming months.
In addition, developer activity has also tumbled on the Solana network. As per the data provided by Token Terminal, Solana has suffered a massive 90% dip in the number of developers on the network, which fell from 2,500 in January to a mere 75 over the past few months. However, the Solana team has refuted these figures deeming them as fabricated numbers.
Solana has noted a declining total value locked (TVL) on its network. DeFiLama suggested in a report that Solana’s TVL has dropped from around $68 million in June to $18.99 million at the time of writing. Recently, Mike Alfred, an investor who serves as a board member of BTC miner Iris Energy and digital asset investment platform Eaglebrook Advisors, compared Solana (SOL) to Santa Claus. He tweeted,
“Before you make fun of that kid who still believes in Santa, just remember there are people who still believe in Solana.”
Before you make fun of that kid who still believes in Santa, just remember there are people who still believe in Solana
— Mike Alfred (@mikealfred) December 26, 2022
On December 27, Ben Armstrong, a crypto influencer and YouTuber, said there would be an increase in the number of projects that would leave the Solana ecosystem. Armstrong wrote,
“I’m sorry if this hurts your feelings… but this is facts. More NFT and crypto projects will leave Solana.”
Will Solana Rebounce?
In contrary, Anatoly Yakovenko, co-founder of Solana Labs Inc, has emphasized that only 4% of the projects built on Solana have been impacted by the FTX collapse. He further claimed that nearly 80% of the teams building projects on the Solana blockchain have no exposure to FTX at all. In fact, Yakovenko seemed optimistic that the Solana ecosystem would grow due to the interest generated by the team’s efforts to explore uncharted territory.
Solana is nowhere near dead, nor is it vaporwave.
It’s had some issues, sure… and the SBF link isn’t doing it any favors, but they will be ironed out and SBF will be forgotten.
They have a quality project and team, albeit with some hiccups that need fixed.
— HUSTLE INC. (@RealHustleInc) December 27, 2022
Another user higlighted that Solana (SOL) is “nowhere near dead” as the network is facing minor issues and will make a comeback. He said,
“Solana is nowhere near dead, nor is it vaporwave. They have a quality project and team, albeit with some hiccups that need fixed.”