Solana’s SOL coin gained 26% in July as the cryptocurrency markets attempted to rebound from the heavy losses seen in the first half of the year. SOL fell towards $26 in mid-June, its lowest level since July 2021, and then moved up to $47 in July before retreating to $40.
In addition to the volatility in cryptocurrency markets, the Solana blockchain has faced ongoing challenges – the latest being a lag in the block time, which has implications for block rewards.
Why has the sol coin price been going down and does SOL token have a future? Here we take a look at the project’s latest developments and a solana price prediction for 2022 and beyond.
What is Solana? Ethereum-alternative ecosystem
Unlike many other popular blockchains that operate today using Proof-of-Work (PoW) or Proof-of-Stake (PoS) algorithms, Solana was among the first to introduce a Proof-of-History (PoH) algorithm, which allows the blockchain to operate quickly while staying secure and decentralised.
Founded in 2017 by former Qualcomm (QCOMM) employee and Dropbox (DBX) software engineer Anatoly Yakovenko and his colleague Greg Fitzgerald, Solana’s main goal was to create an open-source project that implemented a new, high-performance permissionless blockchain.
Because of its PoH algorithm, the Solana blockchain can process 2,000 transactions a second, marking it a competitor to Ethereum (ETH), the second highest cryptocurrency by market capitalisation. Ethereum has become the leader in decentralised finance (DeFi) due to its compatibility with smart contracts, which enable the building of decentralised applications (dApps).
However, Ethereum’s popularity has also made the blockchain expensive and slow to use, which has encouraged the emergence of alternative networks like Solana.
According to Solana’s official website, the platform is “the fastest blockchain in the world and the fastest growing ecosystem in crypto, with thousands of projects spanning DeFi, NFTs, Web3 and more.” In addition to being fast, Solana also boasts average fees of less than $0.00025.
Solana’s ecosystem covers a number of lending protocols, DeFi projects, NFT marketplaces, Web3 apps and decentralised exchange (DEX) projects. It also includes Phantom, a Solana wallet built for DeFi and NFTs, and Audius, a decentralised music sharing platform.
What is a sol coin used for? Solana is powered by its native cryptocurrency, SOL, a coin running on the ERC-20 standard. SOL is used to pay for transaction fees and any purchases in the Solana ecosystem, as well as for staking.
At the time of writing, the total supply of SOL coins exceeded 511 million, with over 339 million tokens in circulation, according to data provided by CoinMarketCap. With the token trading just over $40, SOL had a market capitalisation of over $13bn, making it the 9th-largest cryptocurrency, behind the likes of BNB, ADA and XRP.
On 29 March 2022, Solana launched Solana Pay, a “build your own online store” application on its blockchain. It allows users to create a storefront and accept low-fee, global payments directly into their wallets without the need for a bank or credit card.
Since launching, over 600 merchants have engaged with Solana Pay. Others have begun to incorporate the ecosystem into their payment flows, thus encouraging space for new investors to join the blockchain.
On 12 April, SOL was listed on popular trading platform Robinhood (HOOD). While the move was expected to increase trading interest in the coin, it has so far been unable to support the SOL price.
With Tesla (TSLA) CEO Elon Musk making waves with his offer to buy Twitter (TWTR), FTX CEO Sam Bankman Fried outlined in a Twitter thread how the social media app could run on a blockchain such as Solana. Solana’s developers have hinted at wanting to work with Musk in the past, replying to his tweets.
1) FWIW, some thoughts on what a decentralized Twitter might look like:
— SBF (@SBF_FTX) April 14, 2022
???? dms are open
— Solana (@solana) May 12, 2021
Some of the biggest SOL coin news came as the platform announced a change in the leadership of its Solana Foundation Council on 18 April. The council was established in 2020 with the aim of advancing the adoption of decentralised technologies as a public good, and has since been helping develop the Solana ecosystem.
More recently, Solana Spaces, created in collaboration with The Solana Foundation, launched its first physical store on 28 July, which it calls “the world’s first retail & educational space dedicated to Web3”.
Network jitters weigh on the SOL price
It’s important to note that the Solana blockchain is prone to network outages. During March and April 2022, Solana suffered nine such outages, seven of which were determined as “major”.
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A status update on the Solana website on 26 May showed that the blockchain had fallen “approximately 30 minutes behind wall clocks, due to longer-than-normal block times. While this has no impact on performance or network operations, the time reported by block explorers and dapps may not reflect wall-clock time.”
While the lag didn’t affect the blockchain’s operation, it could have an impact on annual staking rewards. Solana pays rewards to stakers on each epoch, which has 432,000 blocks. Based on Solana’s designed block time of 400 milliseconds, there should be 182 epochs in a year, but longer block times would reduce the number of epochs, leading to reduced earnings.
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The SOL/USD price dropped in response to the update, from $47.98 on 25 May to $43.49 on 26 May and $40.98 on 27 May. The price chart shows SOL fell below $50 on 11 May, as cryptocurrency markets suffered from the impact of the collapse of the Terra UST and LUNA tokens and the US Dollar Index (DXY) hit a 20-year high.
The blockchain’s most recent outage came on 1 June 2022, lasting more than four and a half hours, according to Solana Status. It was the first outage in the past month, with the previous outage occurring on May 1, 2022.
The SOL token dropped from $45 on 1 June to as low as $38.43 on 2 June. Bearish sentiment on the cryptocurrency markets also weighed on the SOL price.
Volatility increased as the token fell to a low of $26.06 on 14 June, then rose to $42.73 on 24 June and dropped back to $31.06 on 30 June. SOL then rallied to $47.10 on 19 July, but it was unable to reach the $50 level and slipped back to $42.40 at the end of July.
The coin has fallen a long way from its November 2021 bull run when it peaked at an all-time high price of $260.06 on 6 November, SOL coin price history shows.
Solana price prediction: What’s the outlook for 2022-2030?
Will the SOL token price be able to move back above $50 in the short term or is there scope for further downside? Technical SOL coin analysis from CoinCodex was bearish as of 2 August. The site’s short-term SOL price prediction indicated that the coin could trade up to $46.49 target price by 7 August but then slide to $43.27 by 30 August.
How high can the SOL coin go in the future? Algorithm-based forecasting service WalletInvestor showed a mixed picture in its Solana price prediction for 2022. The website projected that the coin could trade up to $85 in September, but then drop back to $42.484 by the end of the year.
For the long term, the site’s SOL price prediction showed the coin plunging to $4.738 by the end of 2023 and $2.097 by the end of 2024, then ticking up to $3.43 by the end of 2025. In five years, according to the platform, the coin could trade at $4.129.
But DigitalCoinPrice remained bullish in its solana crypto price prediction. Based on historical figures, the solana price prediction from the crypto data provider indicated that the price could average $56.96 in 2023, up from $52.40 in 2022, rising to $62.94 in 2024, $76.71 in 2025 and $183.16 in 2030.
The SOL coin price prediction from CoinPriceForecast was also bullish, expecting a slightly slower upward trajectory. The projection showed that the coin could trade at $66.72 by the end of 2022 and slide to $61.97 by the end of 2024. The site’s solana price prediction for 2025 indicated that the price could rise to $80.43 by the end of 2025 and climb to $120.52 by the end of 2030.
Price Prediction’s SOL crypto price prediction estimated that the price could rise from an average of $61.46 in 2022, $88.44 in 2023 and $179.57 in 2025. The site’s solana price prediction for 2030 showed the price could then accelerate to $1,208.77, based on its artificial intelligence-assisted technical analysis.
When looking for the Solana price predictions, it’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to come up with a long-term target price. As such, analysts and algorithm-based forecasters can and do get their expectations wrong.
If you are considering investing in cryptocurrency tokens, we recommend that you always do your own research on what factors may influence solana coin price prediction. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any trading decision. Keep in mind that past performance is no guarantee of future returns. And never trade money that you cannot afford to lose.
FAQs
Is Solana a good investment?
In very volatile cryptocurrency markets, it is important to do your own research to determine if it is a good fit for your investment portfolio. Whether the SOL token is a suitable investment for you depends on your risk tolerance, investment goals, and portfolio composition. Keep in mind that past performance is no guarantee of future returns. And never trade money that you cannot afford to lose.
Will the solana coin go up or down?
As of 1 August, algorithm-based forecasters projected that the SOL price could rise. However, predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing.
Should I invest in Solana?
Only you can decide whether Solana is an appropriate investment for your portfolio. Always do your own research. And never invest money that you cannot afford to lose.
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