The crypto market has been a roller coaster lately, especially in the second half of 2023. Solana, a high-throughput blockchain, emerged as one of the best performing coins in the top 10 coins by market capitalization.
In the fourth quarter of 2023, Solana soared, reaching a high of around $125 before cooling down to spot rates. However, some think the uptrend is over as SOL is lower under increasing liquidation pressure.
The Solana bubble has burst, is this true?
Lido.eth, while going to X on January 7, said Solana is a “4Q 2023 bubble” that has “already burst.” The analyst added that this formation does not mean that SOL “is worthless or will no longer be used.” However, based on Lido.eth’s assessment, Solana’s “growth story has come to an end,” raising serious questions about the project’s immediate potential.
In the second half of 2023, Solana grew thanks to renewed interest in the powerful blockchain. Fueled by increasing activity in the decentralized finance (DeFi) and non-fungible token (NFT) scenes, SOL has reversed losses recorded in November 2022.
Additionally, altcoins, including SOL, became major beneficiaries as the crypto community followed the Securities and Exchange Commission (SEC) and whether they would approve the first spot Bitcoin ETF.
So does Arthur Hayes, the founder of the cryptocurrency exchange BitMEX believes that the Solana rally is over. In December 2023, Hayes tweeted that he had rotated funds from Solana to Ethereum, citing “divine inspiration.” The BitMEX co-founder also said that ETH could rally to reach $5,000, but without providing a specific timeline on when this lofty goal will be achieved.
SOL remains in an uptrend, back to $125?
Despite these bearish sentiments, some Solana supporters believe the platform has a “bright future.” They point to the upcoming launch of the Firedancer client.
This validator client will make the network more robust and increase efficiency. The goal is to further decentralize Solana, making the company more interdependent by eliminating weaknesses due to customer concentration. From a price action perspective, continuing cryptocurrency’s general uptrend could also boost SOL prices in 2024.
Looking at the Solana price chart, the uptrend continues, but the sellers dominate, at least in the short term. To quantify it, the SOL is down 30% from its December 2023 peak, when it peaked around $125.
With prices rising within the January 3 bear bar, sellers have the upper hand from an effort-versus-result perspective. For the uptrend to resume, there must be a clear close with high volume above $100. If not, steep losses below $85 could lead to a sell-off that could head towards $60 or worse.
Feature image from Canva, chart from TradingView
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