Solana Labs was founded in 2017 by Greg Fitzgerald and Anatoly Yakovenko. The Solana ecosystem is recognized as a quick, secure, censorship-resistant blockchain and inexpensive, providing the necessary open infrastructure for worldwide acceptance. It is among the initial platforms that use delegated Proof of Stake and Proof of History consensus techniques.
In addition, SOL has no transaction costs, meaning validators are responsible for decentralizing the network by delivering computing resources for validating transactions and ledger redundancy storage.
The Solana foundation has diverse initiatives, including NFTs, Web3, DeFi (Decentralized Finance), and more. They have also introduced Solana Pay, their online store, which is expected to revolutionize the world of payments.
As of recently, Solana has achieved several feats, including:
- During a 20-hour outage with no successful transactions on the Ethereum-killer network, Solana experienced a six-month peak in social volume.
- Past outages on the network have resulted in transient increases in exchange balances as market players engage in "panic selling."
- Despite the occurrence of panic selling, SOL’s price remained resilient, resulting in a 2.3% loss over the weekend.
During the 20-hour network outage over the weekend, the crypto gained traction on social media platforms as a trending topic. Despite Fear, Uncertainty, and Doubt (FUD) among cryptocurrency market participants, holders of SOL managed to weather the storm, and the price only fell 2.3%.
Solana's 20-hr network outage reveals influence over SOL price
Solana, a rival of Ethereum, conducts all of its consensus-related tasks on-chain, which implies that communication between validators responsible for verifying transactions is carried out via on-chain transactions. This leads to an increase in both transaction volume and Transactions Per Second (TPS).
The graph below demonstrates that the pink section represents actual transactions, while the remaining area reflects the messages exchanged by validators.
Validators work together to agree on proposed transactions. For example, if a user initiates a swap, validators reach a consensus to execute it and then modify the user's balance accordingly. The teal section of the graph displayed previously denotes all of the communication that takes place between validators.
In a network outage, all validators shift off-chain to determine their next course of action. This means that the network's availability and responsiveness depend on the validators. If the SOL blockchain becomes congested or encounters a bug, it may become inoperable.
Previous network outages like this have caused temporary FUD and panic selling. Nonetheless, Solana's value remained steady over the weekend, defying the possibility of a mass sell-off and resulting in a 2.3% decline for investors.
Despite being a popular topic on social media platforms in the cryptocurrency industry, Solana, which competes with Ethereum, went almost 20 hours without a single successful transaction. There were nearly 25,000 mentions of SOL on social media, which is a six-month high in social media presence.
At present, SOL is being traded at $22.49, and even though there was an increase in social volume, its prices have not been affected. This could be due to SOL reversing its previous downtrend and beginning a new uptrend, as is typically seen when negative news has little impact on the price.
Market analysts have identified technical factors that suggest a reversal of the trend for SOL. Specifically, on the weekly chart, it had broken its downtrend line thrice since November 2021, when the bearish trend began. Many market technicians consider this a positive sign that the long-term trend may change.
On the weekly chart, the RSI (Relative Strength Index), which measures momentum, displays a bullish convergence with the price. This is characterized by the RSI achieving a new peak compared to its previous one while the price fails to do so, implying that there is strength underlying the move.
The daily chart for SOL shows that the price has surpassed the critical higher low of $15.05, which was established on December 14. This indicates a shift in the medium-term trend from bearish to bullish. However, the price needs to remain above the February 10 low of $19.70 for the outlook to stay positive, even though the momentum, as measured by the RSI, is weak.
Short-term, the market is being dominated by bears due to the Fear, Uncertainty, and Doubt (FUD) related to the recent network outage. For the bulls to become optimistic again, SOL prices need to break above the high on February 26, which was $23.54. This will indicate that the highs and lows are on the rise again, with targets at $24.30, where the 200-day Simple Moving Average (SMA) is, and then at $27.10.
Can Solana Really Resist The FUD?
Solana is currently priced at $22.7 and has a market capitalization of around $8 billion. SOL's short-term trades are below expectations, per Solana price predictions for 2023.
The market had high expectations for its prices due to developments in decentralized exchanges, the Solana NFT marketplace, yield aggregators, and online games. However, profit booking has taken over, resulting in the coin’s price not rising as much as expected.
Digital Coin Price predicts that Solana's price will be around $55.06 by the end of this year, and they believe that the coin could reach a maximum value of $259 by 2030. Meanwhile, GOV Capital's price prediction for 2023 is $158.75.
Although the crypto’s price is consolidating at the moment, it is expected to meet the expectations of both retail and institutional investors soon. Trader Union's experts predict that the cost of SOL coins by 2025 could be $91.11. However, if the coin's price falls, it may be difficult for investors to predict future price movements.
Read More: