The Rise and Fall of Solana’s Price: Overcoming FTX Fiasco
The price of Solana (SOL) took a hit in 2022, falling nearly 95% partly due to its association with the tainted reputation of crypto entrepreneur Sam Bankman-Fried and his collapsed ventures, FTX and Alameda Research. However, in 2023, SOL’s price has rebounded, making impressive gains in the first quarter.
Solana’s Price Doubles in Q1/2023
During the first quarter of 2023, Solana’s price has risen by 104%, reaching around $20.60 per SOL. This marks the highest gains among the top 25 cryptocurrencies, surpassing even Bitcoin (BTC) and Ether (ETH).
In fact, January was Solana’s best performing month since August 2021 in terms of price performance. SOL’s price rallied by about 140% without any major fundamental announcements, indicating a possible correction from the oversold position in December 2022.
This rally also coincided with Messari’s analysis of the Solana ecosystem after the FTX collapse, which showed that its staking and decentralization were stable and even improved its position. According to James Stautman, a researcher at Messari, “Solana will continue to release a multitude of initiatives, including network upgrades, ecosystem developments, and community efforts, to name a few.” He also expressed optimism, stating that “light appears to be at the end of the tunnel heading into 2023.”
Thus, it seems that the market may have overreacted to Solana’s ties with Bankman-Fried in Q4 of the previous year, resulting in a sharp rebound in 2023.
What’s Next for SOL’s Price?
However, Solana’s performance in February and March has been relatively weak compared to the broader crypto market, as SOL’s January spike left it technically overbought. SOL’s price lost about 40% from the January peak, and its market dominance (SOL.D) also dropped from 0.98% in January to 0.69% in March, indicating that traders rotated capital elsewhere.
Nevertheless, as of March 31, Solana is trading above two technical support levels: a horizontal trendline that has acted as a resistance for SOL’s downside attempts throughout most of Q1/2023, and an ascending trendline that served as backup support in early March when the horizontal one failed.
These two support levels have converged, indicating a possible short-term bounce for SOL/USD towards a multi-month support/resistance flip level of around $26.50, as shown below:
- SOL/USD now eyes a 30% upside prospect in April
- A drop below the two support levels could have SOL’s price retest its March low of $16 as the next downside target
Overall, while Solana’s price may have faced challenges in the past, it has shown resilience and potential for further growth in the future, with various initiatives and developments on the horizon.