Solana is one of the best performers from the bull market, and was one of the few to actually achieve a 1000x increase. Multiple coins did this in 2017, but very few did this time around, most likely because leverage can now be used in the crypto market. Pumping altcoins by this much doesn't seem worth the risk anymore, considering they often just retrace most of their gains. Futures provide a much easier way for people to gain and lose money in the market. So, when a coin like SOL does extraordinarily well against Bitcoin, it MUST be due to fundamentals, right? The chain itself has stopped functioning more than once. 25% of the supply is held by the founders & team. Another 37% is held by initial investors. That's 62% held by people who got SOL for likely under $1. The remaining 38% was reserved for airdrops and the community. There's a lot of people BIG in profit on SOL. Latecomers probably own a very small portion of the supply. Additionally, NFT's are big on Solana, but I believe NFT's are in a huge bubble anyway.
From a tech perspective, maybe it's better than Ethereum. However, the cyrpto market (over time) often doesn't really care about these things. Even in 2017, some of the best performing coins (XLM, NANO, XRP) were also some of the biggest losers. Those coins had significant advantages over Bitcoin, but could not compete with the network effect, or the economic incentives of proof-of-work. High fees were chosen over zero fees, and it remains that way to this day. Ethereum fees have remained consistently high throughout the bull market, and I think this makes crypto exclusionary. It shuts out any smaller crypto enthusiasts, and makes the whole NFT thing seem like a big scam - essentially a party for the wealthy where the ticket is your sanity and your small pile of cash.
Anyway, I don't think the market cares about how fast or how low the fees are. Maybe it does momentarily, but the market is driven on hype and profitability. Under capitalism, barriers to entry increase the concentration of wealth at the top. So wealthy investors are incentivized to hold coins that are harder to obtain, and more expensive to use. Basically a status symbol. I think the market will turn on SOL, resulting in a correction at least back to the 50 week MA (red). The same can happen for SOL/BTC. In the short term, perhaps SOL can have a relief bounce towards the 9 week EMA (near $166). Ultimately, I think it can decline at least 50% from current prices, and perhaps even to test some levels below $60. Potential supports are shown on the chart above. Currently, we don't know how bad things can get for crypto. It's possible things really turn around soon, but I think we'd need a pretty impressive move up from the market to invalidate my bearish bias.
This is not meant as financial advice. I'm posting this really out of curiosity - to see if huge bearish drawdowns continue to occur in the crypto market. I'm curious to see whether Solana can hold up, and last until a new potential cycle.
-Victor Cobra
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Yikes!
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Well, that escalated quickly. Already below the 50 week MA. Perhaps there can be a sort of relief bounce for the market soon, but we haven't seen a huge capitulation wick yet. This is more of a slow capitulation, which has been way more painful for market participants over the last several weeks.
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If SOL can't bounce at the 50 week MA, it can easily head back to $60 and lower.
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And many months later, it's at the bottom, and perhaps even breaking down. Oh how the "mighty" have fallen.
No offense to my like minded freedom fighters using non violent methods to protest (AKA Crypto Currencies) by taking government out of the monetary equation. Excellent Idea 💡 and sounds a lot like my Ape friends with AMC stock talking about price soaring to 1000x on short squeeze. Here is the cold hard to accept truth of the matter and the reason I got out of Crypto and Ape stocks - They are still in control - same idea as “it’s not how many votes you get / it’s who counts the votes that actually matters” When it comes to anything with intrinsic value - do you not believe that the family that prints your money (usd for those who didn’t know which is one of many) and we think the value of Bitcoin and meme stocks (valued in dollars hence USDT for example) is not controlled by them even as we speak ?? If you think all world powers haven’t discussed and worked out strategy years ago that is not printed in the news ?? Son listen 👂 your dad allows you the feeling of freedom/ but he can ground you anytime he wants and your permanently a child so what do you do? Sure your friends like you believe their Monopoly money has value/ but your parents smile and know that it’s only worth something if they let you buy something with it. So they let you have a couple things. Then they realize you will do chores for it / well that’s cool because it’s worthless without the ability to compare to the real money they make (everything is fiat) and most places don’t accept it no matter what the value. Ends up being a bunch of kids stacking up collectible rocks 🪨.
GeorgeCochrane020
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Solana will be like the new cheap eth in a few years
VictorCobra
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@GeorgeCochrane020, Could be. Though ADA declined 98% in the last bear market anyway, before making a new high in 2021. Even still, does it do anything?
-Victor Cobra
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@VictorCobra, You can't compare Solana to Cardano. One has a plethora of development and funding, while the other has very little.
readysetliqd
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Thanks for the perspective! This one got me thinking: "Anyway, I don't think the market cares about how fast or how low the fees are. Maybe it does momentarily"
The market does indeed care about how fast and how low fees are if you can contribute the rise of BNB early 2021 to retail/dumb money euphoria aping into microcap scam projects. That in mind, retail is largely absent from market now. Bearish on SOL until the little guys come back
VictorCobra
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@danielx888, You’re right. Retail cares about efficiency and cost. I mean, these things are necessary if crypto is to be a significant part of our financial future. But my point is that the big players do not care about these things, which makes crypto less likely to be useful for the average person at this moment. I guess my original phrasing was a little off! The more exclusive and inaccessible something is, the higher the premium becomes. I think ETH’s value is essentially at a significant premium, compared to what it would be if fees were low. Regardless, the big guys are the ones who influence the major peaks and troughs of the market cycle.
-Victor Cobra
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i think a lot of what you say is keen observation. a correction is in order for this market. i don't think it will be as severe as some are saying bc fundamentally crypto is still the future of how we do money. but nevertheless we will have to shift down a bit more to go further up.
Walter_White_2021
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That is was a good post, man. Made me think about a couple things in particular. Thanks!!