Solana looks geared for a rally as demand across exchanges spikes.
Ethereum Killer?
Solana ($SOL) looks set to make great strides in the coming year after going through a brutal sell-off as a credible competitor to Ethereum ($ETH). On November 6, $SOL reached an all-time high of $259.96 on Coingecko, riding the narrative as the preferred layer-1 solution.
The network continues to grow and has recorded 48 billion transactions at the time of writing. The Solana Network averages at about 2000 transactions per second (tps), but on September 15, the network failed at 400,000 tps.
Solana Network is one of the most attractive layer-1 solutions. It is able to process transactions faster and has an average cost per transaction of $0.00025. One of the most important metrics to any thriving network are the number of projects building on it. Solana has 5,145 projects built on its network, compared to only 70 projects in January.
Solana’s Potential Rally
$SOL was sitting at $1.52 per coin at the beginning of 2021 but had a meteoric rise of approximately 171x. Solana’s transaction fees are far less than Ethereum’s fees from April 2018 and more than 75% of its supply is staked. This creates an upward bias as demand created by adoption will often result in positive price action.
$SOL is set to mimic $ETH’s rally in 2017 and $BNB’s rally in April, 2021. Other layer-1 solutions such as Algorand ($AVAX) and Cosmos ($ATOM) saw massive price appreciation and this trend will likely continue as the Web 3.0 narrative builds momentum in 2022.
$SOL’s rally will be fueled by several factors. It has a thriving Non-Fungible Token (NFT) ecosystem and a well developed Decentralized Finance (DeFi). In the DeFi space Ethereum is the runaway leader but, unless Ethereum resolves its problem with scalability and fees, smaller players will not be able to participate. Other layer-1 solutions like Solana will benefit.
Areas of Key Resistance
$SOL is a long term play. This is because unlike projects riding on a trending narrative, the Solana Network spans across various segments. Institutional investors have recognised Bitcoin and Ethereum as a store of value and this recognition is more than just a change in terminology. It is a recognition that crypto assets can be classified as risk-off assets.
If $SOL continues to grow, it will also be recognized as a store of value. The key Fibonacci ratio of 61.8% is at $190 and the psychological resistance at $200 will be key prices to be on the lookout. If it breaks above $190, followed by $200 followed by a healthy volume, $SOL will likely record a strong Q1 performance.
Source: Solana News
