Despite Turbulence, Solana (SOL) Holds Strong as a Top-10 Crypto Asset
Over the past six months, Solana (SOL) has experienced its fair share of turbulence, but it continues to maintain its position as a top-10 asset in the cryptocurrency market by market cap. This speaks volumes about the trust that investors and holders have in Solana, which has earned the nickname “Ethereum killer” from its dedicated users.
This trust is reflected in the price charts. As we entered 2023, SOL was hovering around the $10 support zone, caught in a downtrend that started back in November 2021 when SOL was trading at $200. Just as investors were anticipating further losses in the crypto market in January, Bitcoin began a climb past $17k, shifting the shorter-term sentiment to bullish.
Solana benefited greatly from this shift and recorded gains of 175% in just 21 days. However, it was unable to break through the $26-$28 resistance zone, which has acted as support since June-November 2022.
The Spotlight on Solana’s Decentralization Narrative
Recently, Solana, along with several other altcoins, was alleged to be securities in the United States Securities and Exchange Commission’s (SEC) latest lawsuit against Binance. This shifted the spotlight to the decentralization narrative, which lies at the core of blockchain technologies.
On the other hand, the on-chain analytics firm Messari published a report last month analyzing the degree of decentralization among different chains. Solana, a proof-of-stake (PoS) network, demonstrated a high degree of decentralization with an aggregate Nakamoto coefficient of 1.9, outperforming its peers.
Predicting Solana’s Future with ChatGPT
According to AMBCrypto’s prediction bot, the most bullish scenario for 2023 could see SOL valued at $75.5. However, it is worth exploring ChatGPT’s insights on the price, network health, and trajectory of Solana by providing it with relevant data points.
ChatGPT has proven to be an impressive chatbot, and the recent updates in ChatGPT 4.0 have enhanced its capabilities. While it is a powerful learning tool trained on a wide range of topics, it’s important to note that it mimics human behavior and may not always provide factual accuracy. The jailbreak version of ChatGPT, in particular, is designed to avoid saying “no” to user requests, which may lead to even less accuracy.
Nevertheless, by giving ChatGPT an understanding of the present and recent past, we can obtain some speculative insights into the future.
ChatGPT’s Perspective on Solana
So, what does ChatGPT have to say about Solana? Does it see a path to recovery after recent setbacks? Based on transaction fees and transaction speeds, ChatGPT seems to believe that Solana has the potential to become an “Ethereum killer.”
However, ChatGPT is yet to be informed about the challenges faced by Solana and SOL investors in recent months. Let’s start with the major blow to investor confidence – FTX, where the downfall began.
FTX: Where the Freefall Began
Sam Bankman-Fried, the CEO of FTX, was one of the most vocal proponents of the Solana network. His credibility as an investor and entrepreneur was well-regarded, and FTX, one of the largest crypto exchanges, was posing a significant challenge to Binance in terms of volume and token pairs. Healthy competition benefits the industry and serves the customers.
However, a lot has changed since then. The SEC has charged Mr. Bankman-Fried with defrauding FTX’s equity investors, alleging that he commingled FTX customer funds with Alameda’s for undisclosed venture investments. If convicted on all counts, he faces a potential prison sentence of more than 100 years.
This has not only damaged the reputation of Solana but also led to the foundation selling a substantial amount of SOL to FTX Trading and Alameda Research. This amounted to 58.08 million SOL, representing 11% of the circulating supply at the time of FTX’s bankruptcy filing, with a value close to $1.1 billion.
As expected, the price of Solana plummeted in November, experiencing a 45% decline from November 11 to December 31, dropping from $18.08 to $8. With rumors of FTX’s insolvency circulating since November 5, SOL had already lost 50% the previous week when it was trading near the $38 mark. This resulted in a total loss of 79.4% for SOL between November 5, 2022, and December 31, 2022.
Optimism and Network Issues in Early 2023
Despite the setbacks, early 2023 proved to be highly favorable for SOL investors. However, network issues surfaced, similar to those experienced in 2022.
In January and February 2023, SOL experienced a remarkable gain of 180% on the price charts, surging from $9.69 to $27.12. This extraordinary rally can be partially attributed to Bonk, a meme coin introduced within the Solana ecosystem inspired by Shiba Inu.
A portion of the total 99 trillion supply of Bonk was airdropped to Solana users’ wallets in December. The daily transaction count had been on a downtrend in the second half of December, but it started to rebound in early January.