von • Solana’s (SOL) price fell nearly 95% in 2022 due to its association with Sam Bankman-Fried and his collapsed ventures, FTX and Alameda Research.
• The cryptocurrency has gained 104% in the first quarter of 2023, outperforming other top 25 assets including Bitcoin (BTC) and Ether (ETH).
• The market may have overreacted to the FTX links which resulted in a sharp rebound for SOL’s price.
Solana Falls 95% Due to Links With FTX
In 2022, Solana (SOL) suffered heavy losses – dropping nearly 95% – due to its association with crypto entrepreneur Sam Bankman-Fried and his collapsed ventures, FTX and Alameda Research. This caused investors to be wary of the cryptocurrency’s future prospects.
SOL Gains 100% In Q1/2023
Despite the slump from last year, Solana has bounced back in 2023; gaining 104% so far this quarter – making it the highest gainer out of any cryptocurrency in the top 25 rankings. January was particularly strong for SOL as it rallied by around 140%, despite there being no major fundamentals that could have driven up its prices. Messari’s analysis of Solana after the FTX collapse showed that its staking and decentralization were stable and improved after the events. This suggests that traders had overreacted when pricing in the risk associated with Bankman-Fried’s ties; resulting in a sharp rebound for SOL’s price.
Price Drops After January Peak
After reaching an all time high at $20.60 per SOL in January, much of those gains were lost throughout February and March as SOL dropped by 40%. Its market dominance also decreased from 0.98% to 0.69%, suggesting that capital was rotated into other cryptocurrencies during this period. Nonetheless, Solana is still trading above two technical support levels: a horizontal trendline capping downside attempts mostly throughout Q1/2023 as well as a Fibonacci retracement level connecting higher lows since October 2020 .
Future Prospects For SOL
With light appearing at the end of tunnel for Solana heading into 2023, investors will be looking towards further developments within its ecosystem such as network upgrades, ecosystem developments and community efforts that can drive up its prices even further this year. Additionally, if Sam Bankman-Fried is able to put together another venture soon then it could significantly improve sentiment towards him which would likely benefit SOL’s price too.
Conclusion
Overall, while Solana has undergone some difficult times due to its links with FTX and Sam Bankman-Fried, it appears that investors have begun to take a more optimistic view on their prospects going forward into 2023 which is reflected by its impressive gains so far this year compared with other top 25 cryptocurrencies such as Bitcoin (BTC) or Ether (ETH).
