Are we observing a significant change in blockchain adoption with Solana’s user base expanding rapidly, or will Ethereum’s sustained leadership in high-value applications keep it in front for the foreseeable future?
The remarkable resurgence of Solana
Solana (SOL), regarded as one of the top blockchain networks within the crypto realm, has undergone a tumultuous journey over recent years.
After reaching unprecedented heights in 2021, with SOL peaking at $260.61 in November, the token faced a stark decline following the FTX collapse in 2022.
Sam Bankman-Fried, the founder of FTX and a prominent backer of Solana, saw his trading firm, Alameda, hold substantial amounts of SOL. The fall of FTX sent shockwaves throughout the crypto landscape, significantly impacting Solana.
SOL’s price fell to under $10, losing over 90% of its value amid widespread market panic and selling pressure linked to its FTX connections.
As we move into 2024, Solana’s price movements suggest a different narrative. Starting the year strong, SOL maintained the bullish momentum from 2023, steadily gaining value.
However, by September 6, SOL’s price retreated to a low of $121 as bearish sentiments briefly surfaced.
Yet, as of October 23, SOL is trading around $168, indicating a robust recovery from its September lows and a significant distance from the $10 lows reached in 2022.
This rebound is part of a wider recovery within the crypto market, with an optimistic outlook returning across major assets.
With a rekindled interest in Solana’s technology and an uptick in adoption, could Solana be poised for another bullish phase, or will volatility present new obstacles?
Let’s delve into the key elements propelling SOL’s price, juxtapose them with Ethereum (ETH), and examine expert forecasts regarding Solana’s price trajectory in the upcoming days.
Solana’s 2024 growth: an explosion in adoption, growth, and stability
2024 has emerged as a breakout year for Solana, showcasing its best performance in terms of growth, adoption, and stability.
After enduring setbacks in 2022 and 2023, where its total value locked and other metrics plummeted significantly, Solana has executed an impressive recovery, presenting strong metrics in various sectors of decentralized finance and blockchain performance.
Total value locked — a notable resurgence
Total value locked is a fundamental metric utilized to evaluate the vitality and engagement of a blockchain’s DeFi ecosystem. It reflects the total sum of assets either staked or secured within the platform’s smart contracts.
In straightforward terms, it illustrates how much capital is flowing within a blockchain’s ecosystem, particularly within DeFi protocols.
For Solana, the tale of TVL has been one of sharp fluctuations. In November 2021, at the apex of the bull market, Solana’s TVL reached over $10 billion, yet it quickly diminished in 2022 following the market downturn and the repercussions of FTX.
During 2022 and 2023, Solana struggled to regain momentum, with TVL figures steadily diminishing with no apparent recovery. However, 2024 has marked a significant turnaround.
As of October 23, Solana’s TVL is currently an impressive $6.20 billion, signaling a notable rebound from the $1.4 billion observed at the year’s onset, which translates to a staggering 342% increase in TVL in less than a year.
To provide context, Ethereum’s TVL has remained relatively stable throughout 2024 yet has been on a downward trajectory since June, when it hovered around $67 billion. As of October 23, it has declined to roughly $48 billion.
The explosive growth in Solana’s TVL, in contrast to Ethereum’s downturn, underscores its increasing relevance, particularly as it garners more users for its ecosystem.
Solana’s DEX trading volume
Another crucial area where Solana has made significant advancements is in decentralized exchange trading volume.
DEX platforms enable users to trade cryptocurrency assets without the need for a centralized authority, and the trading volume on these platforms serves as a vital indicator of user engagement and activity on a blockchain.
Solana has not only gained traction in this domain but has also managed to surpass its main rival, Ethereum. As of October 23, Solana captures over 30% of the overall DEX trading volume from the previous week, in stark contrast to Ethereum’s 16% share.
Just a few months ago, Ethereum consistently maintained over 30% of the market, establishing itself as the dominant player in decentralized trading. Now, Solana’s ascent indicates a shift in user preferences.
With Solana’s blockchain capable of handling thousands of transactions per second, trading on Solana-based DEXs is more efficient compared to Ethereum, where network congestion and high transaction fees can become significant hurdles.
In pure growth terms, Solana’s share of DEX volume has more than doubled over the last six months, while Ethereum’s portion has been gradually declining. This marks a low point for Ethereum’s DEX dominance, highlighting a clear shift in market dynamics.
Blockchain Efficiency
In terms of blockchain performance, Solana is setting the pace.
Per DappRadar, Solana has processed over 476 million transactions in the last 30 days as of October 23—a staggering 33% increase just in the past month.
Likewise, the platform’s unique active wallets (UAWs), which denote the number of users actively engaging with Solana’s decentralized applications, have also surged. Solana currently boasts approximately 95 million UAWs, reflecting a 40% uptick within just one month.
In comparison, Ethereum recorded only 7 million transactions during the same timeframe, with its UAW count at 1.66 million, down 11% in the past 30 days.
However, when focusing on total dApp volume, Ethereum still holds the upper hand. Ethereum has facilitated over $108 billion in dApp volume over the last month, whereas Solana lagged significantly with only $4 billion.
This comparison highlights that while Solana is processing a significantly higher number of transactions and attracting a larger user base, Ethereum retains superiority regarding the total value flowing through its dApp ecosystem.
The higher transaction volumes on Ethereum are primarily driven by high-stakes DeFi projects and institutional-grade applications that have long been entrenched in the Ethereum framework.
Understanding the Surge of Solana
A range of factors is playing a role in Solana’s upward trajectory, with one unexpected contributor being the meteoric rise of meme coins.
Originally sparked by coins such as Dogecoin (DOGE) and Shiba Inu (SHIB), the meme coin phenomenon is now being led by newer tokens. On Solana’s blockchain, the current meme coin excitement has revitalized the network’s volumes, transaction fees, and general activity.
Discussion and hype surrounding the latest meme coins have bombarded platforms like Twitter (now X), generating a speculative whirlwind that often results in significant price surges for these tokens—and, by extension, the networks they operate on.
As traders flock to Solana in pursuit of the next viral meme coin, overall network activity skyrockets, bringing increased liquidity and visibility to the ecosystem.
Ryan Watkins, co-founder of Syncracy Capital and former researcher at Messari, has recently underscored Solana’s distinctive position in the meme coin landscape.
He noted Solana’s function as a “hotbed for all speculative experiments this cycle,” highlighting the chain’s capacity to draw in projects.
Watkins emphasized, “I don’t really care whether meme coins are neo-religions or if AI agents are really launching on-chain cults, all I know is all roads lead back to $SOL.”
Further adding to the enthusiasm for Solana, another market analyst, Gumshoe, pointed out the chain’s impressive performances. “On-chain degeneracy happens on Solana; the market will soon start incorporating the paradigm shift,” Gumshoe stated.
Expert analyses suggest that there is a collective agreement that Solana is evolving into the preferred platform for speculative trading characterized by high risks and high returns, mainly due to its speed and scalability in comparison to other chains.
While the meme coin excitement has undeniably fueled Solana’s recent uptick, it prompts the question of sustainability.
Meme coins are inherently speculative, often reliant on hype from social media figures rather than tangible utility.
This volatility means their demand can dissipate just as swiftly as it surged. Nonetheless, as long as the fervor persists, Solana is uniquely positioned to reap the benefits.
What lies ahead for Solana?
Numerous traders have indicated specific bullish trends emerging on Solana’s price chart, implying the token may be poised for another upward movement.
One prominent pattern discussed is the Inverse Head and Shoulders formation, a technical setup that commonly indicates a reversal in a downtrend alongside a potential breakout to elevated levels.
MartyParty, a crypto analyst, has brought attention to Solana’s current execution of this pattern, eyeing a target price of $195 upon breaking free from its existing range.
He referred to this formation as a “Bullish Pennant,” typically seen as a continuation pattern forecasting further upward movement.
Moreover, The Moon, a prominent crypto investor and influencer, noted that if Solana can successfully navigate past the Inverse H&S pattern, the potential target could reach as high as $202.74.
Conversely, Crypto Zeinab asserts that Solana must maintain a position above the $171 threshold for these optimistic targets to stay valid. If this level is sustained, it could pave the way for movements towards $189 and $196, as bullish sentiment prevails.
Nevertheless, it is crucial to acknowledge that while the short-term outlook appears promising, risks persist. As always in the crypto arena, exercising caution is essential, and maintaining vigilance regarding both technical indicators and broader market trends is vital. Never invest beyond your means.
Disclosure: This article does not constitute investment advice. The content and materials presented on this page are intended solely for educational uses.