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Solana is trading lower than last week (its lowest level in over three months) despite seeing a brief upswing to $142 earlier yesterday. The token price fell to around $137.50 and then $133 shortly after setting a daily high of $142.47 yesterday. It is now changing hands in a range over 45% below its all-time high as per market data.
Meanwhile, more industry players have continued expressing their conviction in the token reclaiming its place. This has, however, not allayed fears, with confidence among bulls fading and bearish pressure piling.
Below is an in-depth look at the Solana market and major headlines around its ecosystem.
Solana is contesting Ethereum’s dominance, JPMorgan suggests
JPMorgan analysts led by crypto strategist Nikolaos Panigirtzoglou have theorized that Solana is increasingly gaining market share from Ethereum. Business Insider reported today that according to a note JPMorgan wrote to clients, the Ethereum blockchain continues to experience network congestion and high gas fees.
This has pushed projects, more so NFT ones, into seeking alternative blockchains. Panigirtzoglou noted that the smaller users pushed out by Ethereum’s ballooning fees had sought alternatives to set up shop. He explained that Solana was one such ecosystem where they are moving to, and such, it continues to slice chunks from Ethereum’s market share.
Solana, being a scalable network, offers better network performance given that it holds a higher value in transactions per second (TPS) than Ethereum. Its fees have also primarily been on the lower spectrum, far from Ethereum’s, which have grown up to $80 in some instances.
Last week Bank of America said that in addition to Solana’s low fees, its ease-of-use places it in a pole position to upset Ethereum. The bank further predicted that the Solana ecosystem could become a major player in the future financial system.
Solana remains an investor favorite even during a period of negative sentiment
For a fifth week running, cryptocurrency markets recorded outflows in the week ended January 14 with a $73 million figure that brought the five-week total to $532 million. According to CoinShares, which reported the figures, the bearish sentiment towards crypto markets is declining.
However, the Digital Asset Fund Flows Weekly Report also found that Solana has remained largely unfazed by the investor shakiness in crypto. Since August, the ecosystem has seen just two outflow weeks, which places it high as a preferred choice for investors. It recorded $5.4 million of total inflows last week and $0.5 million a week earlier.
Comparatively, last week, Bitcoin had a $54.7 million outflow, and Ethereum recorded a $29.9 million figure. Solana is easy to use, enjoys high TPS, low gas fees and diminished transaction costs, factors that have likely placed it on top of investor lists.
FTX CEO Sam Bankman-Fried bullish on Solana and other alternative ecosystems
In the first installment of the gm by Decrypt podcast, FTX CEO Sam Bankman-Fried named Solana one of the three blockchains (besides Bitcoin and Ethereum) with the most promise this year. The CEO, a long-term supporter of Solana, explained that the ecosystem was one of the few chains showing the will to scale.
Solana seeks to emulate Ethereum’s versatility at a reduced cost and faster speed, and scaling is a push towards this goal. He added that Solana’s roadmap to scaling provided a realistic shot at reaching a level strong enough to support users at an industrial scale.
Last November, Bankman-Fried noted during the ‘Crypto Goes Mainstream’ conference that alternative blockchains, including Ethereum, had failed to focus on scaling. Bankman-Fried’s argued that scaling to support millions of transactions per second at “fractions of a penny per transaction,” which Solana offers, is necessary for mass-scale adoption.
Solana (SOL) market performance
Solana started the year just above $170, but it has failed to retest this level since. SOL/USD trading chart over the last 7 days shows the token has gradually been shedding gains, occasionally charging on fleeting comebacks.
This poor run compounded with recent concerns about the network’s stability and scalability has continued watering down optimism in the crypto hitting its December highs. The range between $125 and $140 holds more significance now more than ever as it potentially defines the token’s trajectory.
It is not all bad, though, as some analysts see Solana bouncing off support at $120 and shooting towards $170. That said, it is crucial for the token to float above $130 as a slump below this will see it eye the $120 support zone.
In the worst-case scenario, if traders exit at this level ($120), SOL/USD will tumble below $100, wiping away most of the gains from the second half of last year. A weekly close above $145, on the other hand, will go a long way in keeping assurances up and abating bearish forces.
To learn more about this token visit our Investing in Solana guide.
Solana Price Eyes Stability Above $90, Users Worried About the Network’s Future Following Weekend Outage
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.