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| CoinCodex - Will Solana Recover? Is Solana Able to Reach $1,000?


Despite the large drop in value compared to its ATH, Solana is far from dead – the cumulative number of Solana wallets increased from 5.09 million to 21.16 million between January 2022 and July 2023. Moreover, Solana’s TVL increased by more than 88% in the past month, more than any other top 40 DeFi chain in the same period.

Solana’s crash from its all-time highs has been truly massive. Even though SOL has gained an impressive 625% since January 1, 2023, Solana is still down just over 70% compared to its all-time high price of $260.

Such a dramatic drop in valuation might be interpreted by some as a sign that Solana might be on its way out. After all, most other major cryptocurrencies have had a softer fall from their all-time highs. Bitcoin and Ethereum are down about 40-50% from their ATH, while BNB is down 63% from its highest prices.

However, there are plenty of reasons to believe that Solana is far from dead. In this article, we’ll be evaluating Solana’s chances for recovery and what the future of Solana might look like. We’ll also look at whether it’s possible for Solana to reach $1,000 in the future.

Key takeaways:

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  • Despite a significant drop from its all-time high (ATH), Solana's wallet count surged from 5.09M to 21.16M between Jan 2022 and Jul 2023, marking substantial user growth.
  • Solana witnessed an 88% TVL surge in a month, outpacing other top 40 DeFi chains, despite a 70% dip from its ATH of $260.
  • Despite last year's setback, Solana remains a vibrant platform hosting diverse projects, attracting attention due to its scalability and affordable transactions.
  • Solana's DeFi activity spiked in 2023, marked by a surge in daily active users, and notable projects like Helium migrating to Solana, alongside Access Protocol's launch.
  • CoinCodex algorithm forecasts optimistic projections for a significant rally in 2024-2025, which could see SOL peak at around $460 in November 2024.

Why did Solana crash so hard? 

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While practically all cryptocurrencies saw their prices crash during the crypto bear market of 2022, Solana was hit harder than most. 

One of the biggest reasons for this is the sudden collapse of the FTX cryptocurrency exchange, which happened in November 2022. The FTX exchange and its affiliated trading firm, Alameda Research, were among the most notable backers of the Solana project and its ecosystem. For example, FTX and Alameda Research had purchased more than 50.5 million SOL tokens from the Solana Foundation, with the investment being valued at around $708 million as of mid-November 2022. 

So, when FTX and Alameda Research were suddenly forced to file for bankruptcy, and the full extent of their fraud started becoming more apparent, investor confidence in Solana also took a big hit as well. Between November 5, 2022, and December 29, 2022, the price of SOL dropped from a local peak of $38.50 all the way down to $9.40—a 75.5% crash in the span of less than two months. 

This, of course, happened in the context of a broader cryptocurrency bear market, which provided additional selling pressure to the SOL markets. However, SOL has bounced back quite well from its December 2022 lows and is changing hands at $72.5 at the time of writing, having displayed a great deal of resiliency and market growth over the past 12 months.

Will Solana recover?

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If you’re considering investing in crypto and Solana is on your shortlist, a compelling argument can be made in favor of SOL.

Even though SOL has taken a beating in the markets, Solana is still one of the more interesting projects in the cryptocurrency sector. The highly scalable blockchain platform has attracted a diverse group of projects, many of which are leveraging Solana’s cheap and fast transactions to build mainstream-oriented decentralized applications. Users can find decentralized exchanges, lending platforms, NFT marketplaces, blockchain gaming projects, and much more on Solana.

Solana’s DApp ecosystem is already much more diverse compared to competitors like Cardano. Another factor that makes SOL worth considering at the moment is simply the fact that the coin is trading more than 70% down from its all-time high. So, if you believe that Solana has strong long-term potential, acquiring some SOL at these prices could turn out to be a good decision. 

Now, let’s take a look at some of the most exciting developments that are happening in the Solana ecosystem.

DeFi activity on Solana has shown impressive growth

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The blockchain has just reached a new yearly high for total value locked (TVL) and has enjoyed a significant increase in daily active users (DAU) in recent weeks. While the spike in TVL provides limited insight into Solana’s recent adoption rate due to it being impacted heavily by SOL’s price action, a more telling metric is the number of daily active users.

According to data collected by Dune Analytics, active decentralized finance (DeFi) users on Solana have risen 4.5x in the past month alone, with the total number of wallet addresses that have interacted with the ecosystem’s dApps more than tripling from 64,000 on November 12th to 196,000 on December 12th.

DeFi active users on solana chart December 2023

Solana Daily Active Users. Source: Dune Analytics (@summit)

Daily Active Users isn’t a perfect metric by any means, as it measures total wallet addresses as opposed to actual unique people. However, the confluence between the skyrocketing SOL price, a new yearly high for Solana DeFi TVL, and a major spike in the blockchain’s daily active users, means that Solana’s recovery is quickly turning into an impressive purple patch.

Helium has moved over to Solana

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Helium, a popular project that’s creating a decentralized infrastructure for wireless networks, migrated from its own blockchain to Solana earlier this year. Per the Helium Foundation, the move was made to benefit from the scalability of the Solana platform, as well as Solana’s well-developed ecosystem of developers and decentralized applications. The Helium platform’s tokens, including HNT, MOBILE, and IOT, have also been migrated over to the Solana blockchain, opening up new use cases for holders.

The Helium Network migration to @solana is complete! ? ?

This is an incredible milestone for the global Helium community and ushers in a new era for a highly scalable and resilient Helium Network along with a new world of utility on Solana.https://t.co/Ip8bVmKeLJ pic.twitter.com/SR5eMbchsS

— Helium? (@helium) April 19, 2023

Access Protocol recently launched on Solana

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An interesting new project that recently launched on the Solana blockchain is Access Protocol. The Access Protocol project provides a new way for online content creators to offer premium content to users. Through Access Protocol, content creators can launch pools where interested users can subscribe with ACS tokens. 

This unlocks access to premium content, and both the content creator and consumers receive an even split of ACS token rewards. Users can withdraw their ACS tokens from a creator pool at any time and use them to subscribe to another creator’s premium content. Access Protocol has already onboarded several publishers, and it will be interesting to follow in the future as it is a mainstream-oriented application of blockchain and web3 tech.

Solana Mobile

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Solana Saga Phone

Solana Saga is a flagship Android phone focused on blockchain solutions. Image source: Solana

The Solana project is making considerable efforts toward bringing the Solana blockchain to mobile devices. The Solana project is working on the Solana Mobile Stack (SMS), which is a suite of tools focused on developing blockchain-based applications for use on mobile devices. The Solana Foundation has established a $10 million Mobile Fund to support developers building mobile-first decentralized applications.

This year, we’ve also seen the launch of a flagship-level mobile phone called the Saga, which includes blockchain-friendly features such as a built-in decentralized app store and seed phrase vault.

Growing number of users

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Another encouraging metric when it comes to Solana and its road to recovery is the growing number of users. Despite the issues facing Solana over the past year, the cumulative number of Solana wallets increased from 5.09 million in January 2022 to 21.16 million in July 2023. 

The total number of Solana wallets

The total number of Solana wallets. Image source: Dune Analytics (@danning.sui)

The increase in the number of wallets has translated into increased DeFi and DEX activity. According to Dune Analytics, Solana’s monthly active users reached a six-month peak of 3.78 million users in May, up from 1.59 million in January. 

Obstacles to Solana’s recovery

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While we can see that there are plenty of exciting developments happening on Solana, the project does have its issues as well. The dependability of the Solana blockchain has been a concern, with the blockchain suffering several major outages in 2022. Public blockchains are supposed to be available on a 24/7 basis, which makes outages a bad look for projects.

In addition, Solana is not exactly among the largest players when it comes to DeFi but is quickly gaining ground. According to DeFi aggregator DeFi Llama, Solana is currently the 5th largest platform for decentralized finance and has a TVL (total value locked) of about $1.39 billion at the time of writing.

Solana’s TVL chart

Solana’s TVL increased by over +550% since the start of 2023. Image source: DeFi Llama

While Solana’s TVL represents less than 2.3% of the entire DeFi market, it is worth noting that Solana has been on a positive growth trajectory in recent months. Since the start of the year, Solana’s TVL grew from $210 million to $1.396 billion, which is about a +554% increase. What’s more, the TVL increased by more than 88% in the past month alone.

While there’s no guarantee that Solana will ever return to its all-time highs again, there is currently still a lot of upside for the coin. SOL has crashed harder than most other major cryptocurrencies, but Solana is still one of the most unique projects from a fundamental perspective.

Still, new advances in Ethereum layer 2 development could make Solana somewhat redundant. Solana’s main selling point is its scalability—if Ethereum layer 2s can start providing comparably fast transactions and low fees, it might be difficult to make a case for Solana in the future. 

Solana price prediction for 2024-2025: SOL could rally close to 0 by next year

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According to the CoinCodex SOL price prediction, we can expect more volatility in the Solana markets in 2023. Based on current trends and technical indicators, Solana is expected to rally up to $122 in February before retracing back to the sub-$100 range by the summer of 2024.

Interestingly enough, the prediction is currently forecasting Solana to go on a massive rally in the second half of 2024, even going so far as predicting new all-time highs at $445 and above in November 2024. In 2025, the algorithm forecasts a return to the norm, with SOL stabilizing in the $200 territory.

Please keep in mind that this Solana prediction is based on the current snapshot of the Solana market and the relevant technical indicators. The cryptocurrency markets are highly unpredictable, and this also applies to Solana. 

Can Solana reach ,000?

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Investors who are particularly bullish on Solana often discuss ambitious price targets for SOL. One of the potential targets we see mentioned often is $1,000. This is not too surprising, as investors are often focused on round numbers, such as $10, $100, $500, or $1,000—these are often called “psychological price levels”.

It is certainly possible for Solana to reach $1,000 in the future under the right conditions. At its very peak in November 2021, SOL reached a price of just under $260, which corresponded to a market capitalization of $78.3 billion.

Given the current SOL supply of 427.5 million tokens, an SOL price of $1,000 would translate to a $427.5 billion market capitalization for Solana. This is obviously a very large valuation, but it’s not completely unthinkable. For example, the market capitalization of Bitcoin at the time of writing is $587 billion, so it’s definitely possible for cryptocurrencies to reach such market capitalization.

Ethereum’s peak market capitalization was around $548 billion, so it’s definitely not out of the realm of possibility for Solana to reach a $833 billion market cap. Still, getting to a price of $1,000 would require Solana to increase in price by about 14x, which won’t be easy at all. 

The bottom line—What will Solana’s future look like?

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After the collapse of FTX and Alameda Research, many commentators in the cryptocurrency community quickly started proclaiming that Solana was dead. However, it’s very unlikely that Solana is going to zero. In fact, the cryptocurrency has shown a great deal of resiliency in 2023 and became the best-performing digital asset out of all the top 30 cryptos thanks to a +635% yearly surge.

Solana has a good chance to recover, although it’s too early to speculate about new all-time highs at this stage. The Solana ecosystem continues seeing new and exciting projects, and the platform’s low fees and fast transactions are hard to beat for anyone who’s looking to launch a decentralized application that needs to handle a lot of traffic. If Solana's development activity continues to flourish, Solana could be a good investment in 2024.

In addition, SOL is trading 70% below its all-time high, so there’s certainly an opportunity for those who are looking to buy the dip. 

Sources


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