Solana’s price surge has recently been stirring up the crypto market, hitting an all-time high for 2023. However, it’s worth asking whether this rally has its support rooted in firm fundamentals or not.
Solana’s price momentarily spiked to a significant peak in June, following an encouraging court ruling regarding Ripple’s status as a security. The gains not only compensated for the losses from June 2023, but regained levels unseen since November 2022, when the collapse of FTX exchange was witnessed. Nevertheless, this promising rise incites speculation about its sustainability, particularly considering the $30 level as a crucial resistance.
It’s rather concerning that the Solana ecosystem hasn’t shown much growth recently. The total fees paid on Solana remain in Q3 2022’s range, indicating that the network’s activity hasn’t fully revived. Also, Solana’s active user numbers have continued to hover near yearly low values. Despite initial optimism, it seems Solana’s struggling to secure a strong foothold in DeFi – its liquidity has considerably dropped by 97% from the peak in November 2021.
Interestingly, Solana’s evolution in the NFT space is quite contrasting, with its NFT trading volume maintaining a steady third position since mid-June. Yet, even this sector witnessed a drop towards yearly low levels in July. Similarly, gaming on Solana also seems to be lagging behind, with its most popular games having less than 10,000 monthly users – the competition in blockchain gaming is leading by more than double the user count.
While the situation seems rather muted, Solana’s team is striving to upgrade the blockchain to boost speed and scalability. A notable development by Jump Crypto, the Firedancer upgrade, is predicted to push Solana’s speed to over 1 million transactions per second. The prospects of this update, due in late 2023, infuses some enthusiasm, but the crucial test would be performance post-implementation and how well it can tackle network downtimes.
Overall, it appears that the euphoria around Solana’s price surge lacks a substantial backing from its ecosystem’s health. Until the said improvements kick in and deliver the promised performance enhancements, it’s hard to foresee a long-standing bullish trend for Solana. The swift rise sparked by Ripple’s news might invite a retest at lower levels before making any substantive move upwards. Therefore, traders and investors must tread with caution until further clarity emerges.
Source: Cointelegraph
