Like all cryptocurrencies, Solana network’s SOL has experienced extreme price volatility due to a variety of challenges, including current economic uncertainties. Most recently, SOL lost around half its value following the turmoil surrounding the collapse of the FTX crypto exchange. All this has left crypto investors wondering if SOL remains a worthwhile investment into 2023.
SOL’s performance in H2 2022
The second half of 2022 (H2 2022) has been a tough period for SOL. In particular, November saw the value of the cryptocurrency fall by 50%, due to the turmoil surrounding FTX. The well-documented collapse of the exchange hit SOL particularly hard, given the deep ties it had with FTX and founder Sam Bankman-Fried.
However, to put H2 2022’s headwinds into context, the price of SOL had been falling steadily since the beginning of the year. It started 2022 at just under $180, and even before the FTX issues intensified, it was hovering around the $30 mark. On 9 November, SOL’s price closed at $13.94, down from $24.15 on 8 November, as news hit that a potential FTX rescue deal with Binance had fallen through. Then, on 11 November, FTX entered bankruptcy.
While the price of SOL has since rebounded slightly, it is a long, long way from its all-time high of $260.06, which was reached in November 2021. So, does all this mean SOL is in terminal decline or that it is a good time for savvy crypto investors to jump on board ahead of a 2023 resurgence?
SOL’s outlook for 2023
Mixed would be a good way to describe SOL’s outlook. Overall, the consensus seems to be that SOL is in bear territory, meaning it is not currently considered a great investment. Forecasts for SOL into 2023 range from around $19 to $35, with some predicting a steep drop to as low as $3.
Of course, while there are issues specific to SOL, it is also vulnerable to developments affecting the crypto market in general and the wider macro-economic pressures. For example, and especially in light of the FTX collapse, the issue of regulating crypto may come under the spotlight in 2023.
However, on the plus side, despite its price decline over the past 12 months or so, SOL and the Solana network have pretty strong fundamentals. These include the proof-of-history and proof-of-stake consensus model, which mean it can process 50,000 transactions per second, compared to bitcoin’s three. There is also its scalability and the attractiveness of the network for running such popular applications as non-fungible tokens. In November, Solana also announced a pretty wide-ranging partnership with Google.So, while 2023 may not see a sharp uptick in SOL’s value, it might be a worthwhile longer term investment. However, as always, the advice is to do your homework. For new investors, especially, it is important to research the market and the wider issues affecting the industry, using such sources as, Crypto Basics – What is cryptocurrency?. This way, you can make an informed decision about whether to dive into the choppy waters of crypto investment and potentially take advantage of any future upswing in the price of SOL.
