• Solana has dropped 95% in value, from $54.5 billion to $4.4 billion, due to its association with Sam Bankman-Fried and unfavorable macroeconomic conditions.
• Top projects have fled the blockchain this year, with concern over long-term future of Solana.
• Outages have been a major issue for Solana, which has caused further bearish price action.
The year 2022 has been a difficult one for cryptocurrency investors, and even more so for fans of Solana. Back in January of this year, Solana was the fifth largest crypto in the world, having achieved a market cap of $54.5 billion. Unfortunately, Solana has experienced a drastic decline in the months since, with its market cap now resting at $4.4 billion. This represents a drop of more than 95% in value, making it the sixteenth largest crypto.
The macroeconomic conditions of the past year have been the main cause of this decline. After a decade of low interest rates and a free-flowing money printer, the Federal Reserve put the brakes on, signalling a bear market in the wider economy. This has had a dramatic effect on the crypto market, with many coins experiencing losses. However, when compared to Bitcoin, the difference in performance is particularly striking, with Solana faring much worse.
The outages that have plagued Solana since its inception have been another major factor in its decline. Since June, I have written extensively about the issues that arise when Solana’s protocols are not working correctly. It is often compared to a broken pair of headphones – great when they work, but not so great when they don’t. This has caused further bearish price action, with investors concerned about the long-term prospects of the blockchain.
The lack of trust in Solana has been compounded by the flight of top projects from the blockchain. It is not clear why this is happening, but it could be due to the unreliable nature of the platform or a lack of confidence in the team. Whatever the reason, it has had a major impact on the price of Solana, with investors increasingly wary of its future.
It remains to be seen whether Solana can recover from this devastating decline. However, it is clear that the blockchain is facing a major challenge if it is to remain a viable investment option in the coming years.