Ethereum-Killer Solana Down 96% in 2022, Drops Out of Top 20 Crypto List

UTC by Bhushan Akolkar · 3 min read
Ethereum-Killer Solana Down 96% in 2022, Drops Out of Top 20 Crypto List
Photo: Depositphotos

Despite a major correction in SOL price after the implosion of FTX, Ethereum co-founder Vitalik Buterin believes that Solana has a bright future.

The year 2022 has been one of the most dreadful years for crypto market investors and Ethereum-killer Solana is particularly going through a very rough phase. On Thursday, December 29, the Solana (SOL) price tanked a further 17% moving all the way to $8.5 levels.

The SOL cryptocurrency also dropped out of the top 20 crypto list, however, it has partially recovered from there as well. As of press time, SOL is trading at $9.38 levels with a market cap of $3.4 billion. Since the beginning of 2022, the SOL price is down by more than 96% so far.

The major correction in Solana (SOL) price was triggered after the implosion of the crypto exchange FTX last month. The now-defunct FTX exchange and its sister trading firm Alameda Research had invested in a number of Solana-based projects. Additionally, FTX was also building its native projects such as the decentralized finance (DeFi) platform Serum. Lastly, FTX US planned to launch its NFT marketplace on Solana. But all these projects are no longer operational.

One of the major reasons is that Alameda Research was holding SOL in huge quantities and as a reserve currency. However, it went on an SOL selling spree in order to protect FTX’s native cryptocurrency, the FTT token. This resulted in a downward spiral for SOL, which has yet to recover from the FTX collapse.

In just the last eight weeks since the FTX implosion, the SOL price has tanked further by 75%. As result, many market analysts are casting doubt on whether Solana can sail through going into 2023.

Will Solana Survive in 2023 and Go Higher in Crypto Rankings?

During an interview earlier this month, Solana Labs co-founder Anatoly Yakovenko shared his views on the current development. He added that instead of focusing on the SOL price, they would rather focus on building the technology and making it more robust.

Yakovenko was on close terms with FTX’s disgraced founder Sam Bankman-Fried and appeared with him alongside several conferences and fire chats. “I’m still trying to square what I perceive him to be and like what actually happened. It just feels really, really jarring,” he added.

But Yakovenko has added that nearly 4% of the team building on Solana was actually affected by FTX’s collapse. The Solana co-founder said that about 80% of teams on Solana’s blockchain have no exposure to FTX of any kind. Yakovenko said that they are in touch with all the impacted founders and are considering offering them emergency capital. “There’s definitely more to Solana than FTX,” Yakovenko said.

The Solana Foundation currently has $1 million worth of cash equivalents on the FTX.com exchange. Amid the bankruptcy proceedings, they are unclear on what shall happen to those funds.

Interestingly, Ethereum co-founder Vitalik Buterin has extended his support to Solana. He wrote:

“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. Hard for me to tell from outside, but I hope the community gets its fair chance to thrive”.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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