Cryptocurrency Solana Roars Back With Dramatic Price Surge
It’s a real comeback — the return with fanfare of a cryptocurrency that many experts and industry sources gave up almost for dead after the bankruptcy of the empire of Sam Bankman-Fried on Nov. 11.
Solana (SOL), they said, was not going to be able to survive the earthquake represented by the fall of the FTX cryptocurrency exchange and its sister company Alameda Research, a hedge fund that also acts as a trading platform for institutional investors.
FTX and Alameda were the main companies representing the Bankman-Fried crypto empire, known by the initials SBF, in the crypto space.
Solana indeed had close ties to Bankman-Fried. Dubbed ‘Sam coin,” Sol is a token issued by the Solana Blockchain, which makes it possible to develop decentralized finance or DeFi projects that offer financial services such as loans, mortgages, financial products, etc.
The token is tied to an on-chain crypto exchange called project Serum, created by Bankman-Fried, who resigned on Nov. 11, following the bankruptcy of his empire. Serum is a liquidity hub.
Serum is one of the foundations of the Solana DeFi infrastructure, as it is the protocol and ecosystem that brings high speed and low transaction cost to Solana DeFi. It implements a on-chain central limit order book and matching engine, allowing to share liquidity and to offer powerful trading features to institutional and retail investors.
Serum is asset agnostic: It provides developers with full control and flexibility to build trading applications that leverage Serum’s liquidity and ecosystem benefits.
As if to prove the Cassandra right, Sol prices thus fell by 73% between the start of FTX’s difficulties on Nov. 6 to Dec. 31. They ended the year at $9.96 compared to $32.72 on Nov. 5.
SOL Is Up 79%
But as fast as they crashed Sol prices are also rebounding very strongly. Over the last seven days, they are up 79% according to data firm CoinGecko. Sol knocks on the doors of the top 10 cryptocurrencies in terms of market value at last check. The token belonged to this club before its collapse.
Prices are currently trading at $23.39, which is up 134% since the start of the year.
Sentiment around Solana changed after a statement of support from Vitalik Buterin, one of the most influential voices in the crypto space.
“Some smart people tell me there is an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a bright future,” Buterin, one of the co-founders of Ethereum, the most powerful platform in the crypto sphere, wrote on Twitter on Dec. 29.
He added that: “Hard for me to tell from outside, but I hope the community gets its fair chance to thrive.”
For many sources in the industry, the resurgence of SOL is also due to a growing demand for decentralized finance projects. The Solana blockchain allows developers to create decentralized applications, or dApps, at low costs and offers speed in the execution of transactions.
Its scalability, speed, and affordability make it an attractive option for DeFi projects that need to process large amounts of transactions quickly and at a low cost.
“While traders are celebrating the resurgence of #Bitcoin (back over $21k) and #Ethereum (back over $1,550), #Solana is the real star as the weekend is kicking off,” commented on-chain analytics firm Santiment. “Up +22% in the past 2 hours alone, $SOL has been fueled by liquidated shorts.”
Santiment suggests that the strong rebound in Sol prices is due to a “short squeeze,” which is a sudden surge in the price of an asset due to the fact that investors who bet against the asset are forced to purchase it in order to limit their losses.