Solana: Why is SOL Having Such a Bad Time?

Solana: Why is SOL Having Such a Bad Time?

In Brief

  • The Solana Network has touted itself as an “Ethereum killer” due to the transaction speed and scalability it offers, but has suffered from various outages and downtimes in the past year.

  • The native SOL token has reflected this, with a price decline of over 75% since last November.

  • There has been a recent uptrend in social activity and the price jumped 10% in the last 24 hours, but it still trades at the lows it hit last July/August.

Solana: Why is SOL having such a tough time, from network outages to the bear run?

The Solana Network was supposed to be an "Ethereum killer". This is because it offers faster transaction speeds and scalability. However, it has not lived up to this name. In less than a year, the blockchain has suffered a series of outages. This has caused members of the crypto community to question it's claims of reliability.

Solana has had five major outages in less than six months. This has caused the price of the SOL token to drop significantly.

The price of the SOL token crashed from $46 to $38.5 in less than a day, following an outage on 1 June. The market capitalization of the token also dropped from $15.6 billion to $13.3 billion in that time.

The SOL token has declined by over 75% due to the series of downtimes on the Solana Network and the bearish outlook of the crypto market so far this year.

The SOL token is currently trading close to the level it was at last August. This is dangerous, as it's been on a downward trend since November.

The SOL token, launched in March 2020 by the Solana Foundation, is currently exchanging hands at $43.17 per token. This is the same low it hit last July/August and it's struggling to find its place in a very competitive market.

The SOL token has been having a tough time fending off bears since 16 November, as you can see from the price chart movements (yellow arrow). There was a brief bull run from 27 November to 2 December (pink arrow), but since then the bears have been in control.

The SOL token has lost 81% of it's value since December 2nd.

The market capitalization of the SOL token has declined 79% from $70.21 billion to $14.69 billion in a short period of time.

The Solana Network claims to offer increased transaction speed and scalability. However, on-chain analysis of the past seven months reveals that development activity has actually decreased during that time.

A key metric when evaluating a cryptocurrency project is to look at the development activity. If there's no new features being released, or the project isn't being worked on, this can be an indication of future trouble. For example, in the last seven months, the level of development activity for Solana has fallen by 48%.

The SOL token was struggling in March, but things have picked up since then. The social dominance and social volume have been increasing, with the occassional dip.

There have been a lot of downtimes, which is likely due to the social dominance (2.547%) and social volume (450).

The crypto posted some gains in the last 24 hours.

Even though it's had a terrible year, the SOL token managed to increase in value by 10% in the last 24 hours. Right now it's the 9th largest crypto by market cap, according to Coinmarketcap.

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