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Forex News

Crypto Evolution: What’s Driving Solana Prices?

December 20, 2021
BY Paul Reid

Solana has skyrocketed by over 14,000% since its Initial Coin Offering (ICO). Such a rise can never be seen in traditional financial institutions and is even considered a rarity in the crypto space. With a market cap of 63+ billion, Solana is playing in the big leagues now, even though it is still considered young compared to many of today’s digital currencies.

Crypto traders are openly supporting a wider adoption of Solana, and their justification is possibly the same reason SOL trading volume continues to grow. So what is this powerful component that fueled such a breathtaking price hike from the start?

Solana Tech

The Solana blockchain platform offers certain product features that outperform even the top names. For example, Solana’s transaction costs are very low with an average of just  $0.00025. Mining charges are also much less than the vast majority of altcoins, and Solana’s technology supports more transactions per second than any of the competition right now. Impressive.

SOL is now considered a major competitor for Ethereum’s features and/or services. Both SOL and ETH are ideally designed for smart contracts and NFT functionality. Two factors that are trending in the crypto space right now.

But Solana’s performance hasn’t been flawless. Minor teething issues could be the reason SOL didn’t overtake Binance Coin this year and take the number 3 spot. The 17-hour outage of September 2021 disrupted millions of transactions, causing many tech-driven investors to question Solana’s stability and potential for expansion. Compared to Bitcoin and Ethereum’s long-standing proven track record, Solana still has issues. Solana fans justified the hiccup as nothing more than growing pains and lessons learned.

Of all the coins, SOL stands out as the next big crypto worthy of mass adoption and four-digit prices. But, such a positive opinion was also widely believed for XRP in past years, which has never broken the single digit price range. Of the hundreds of new coins flooding the crypto world, most of them don’t have the depth and functionality of SOL. Is innovation enough to give market confidence and drive 2022 prices?

Trading SOL

Not accounting for Tether, which is connected to USD for easy trading between coins, SOL is the 4th largest cryptocurrency by market cap. A larger market cap suggests a more stable price action, although price stability is mostly unheard of in the crypto space.

SOL follows the bullish and bearish behavior of all other cryptocurrency prices, which suggests that traders of the other big coins are also trading SOL. But, there are other aggressive price influences such as big investors and hedge-fund consortiums that are pumping and dumping (buying and selling). Clearly SOL is already on their watch list.

Michael Novogratz, former hedge fund manager of Fortress Investment Group, told Bloomberg TV “The market is focused on ‘fast is better’ and can they get people to build on it?”

If speed and reliability is the primary price influence, then those altcoins that are lacking technical infrastructure may see bearish activities in the coming months. Tech-influenced crypto investors may choose SOL as a valid migration option for their funds, based on Solana’s impressive technical innovations. Only time will tell, but for now, SOL’s forecast looks sunny.

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