Solana, the blockchain with the altcoin SOL has popped its head over the $100 level, where it started the month, with a 6% rise today (24 March).
It had a boisterous start to March after recovering from the shock to the markets caused by the Russian invasion of Ukraine. It then drifted down as low as $78.22 before this most recent strike for higher ground.
However, it is a long way from regaining all time high territory it hit last November when it topped $260.
Why has SOL been dropping? What is a plausible target price for 2022? What is Solana crypto and what’s in the future for the Solana coin? Is it a good time to buy Solana?
In this article, we look at the protocol and some Solana price predictions to ask is SOL a good investment?
Solana takes on Ethereum
The Solana Labs project was founded in 2017 by Anatoly Yakovenko, a former engineer at Qualcomm (QCOM) and Dropbox (DBX), along with Qualcomm colleague Greg Fitzgerald. Joined by several other former colleagues, they launched the Solana protocol and SOL token in 2020.
The Solana blockchain aims to challenge the Ethereum blockchain as a basis for decentralized finance (DeFi) by offering high-speed transaction processing and low fees. High gas fees and network congestion have prompted application developers to look for alternatives to Ethereum.
The number of active developers using the Solana blockchain has climbed in recent months to more than double those on Ethereum, making it the leading developer blockchain, data from research firm Sentiment shows.
Solana can process more than 2,500 transactions per second, compared with 15 on the Ethereum network, real-time data from Blockchain and Solana Beach show. Solana’s maximum theoretical throughput is 50,000 transactions per second with 400ms block times, and as hardware gets faster so will the network.
It has so far processed more than 50 billion transactions, with an average cost of $0.00025, running more than 1,200 validator nodes.
Solana uses a hybrid protocol that combines its proof of history (PoH) consensus algorithm with the proof-of-stake (PoS) consensus that newer blockchains use and Ethereum is migrating towards. PoS is more efficient and less energy-intensive than the original proof-of-work (PoW) consensus that early blockchains like Bitcoin use.
Solana’s protocol verifies transactions based on the ownership of staked Solana tokens rather than mining. The Solana Foundation, which is developing the open-source network, released a report on 24 November stating that “a transaction on Solana takes less energy than two Google searches and 24 times less energy than charging your phone.” The foundation says it “will continue to release periodic reports on Solana’s energy usage and take steps to minimize the ecosystem’s environmental impact.”
The energy consumption of cryptocurrency and non-fungible token (NFT) trading has raised concerns among some market observers and prompted Tesla (TSLA) to halt its acceptance of bitcoin for payments earlier this year. Reducing the environmental impact of mining and trading could have an impact on the future and the widespread adoption of cryptocurrencies and DeFi applications.
Solana was designed to run smart contracts to rival Ethereum as a platform for running decentralized applications (dApps) and its ecosystem is growing rapidly. Two of the top six NFT marketplaces by volume Magic Eden and Solanart run on the Solana network, the latest data from DappRader showed, although their volumes remain a fraction of the volumes seen on the Ethereum-based marketplaces.
The number of daily active wallets on Solana crossed 200,000 three times in October, up from a low of 62,000 in mid-September. The number dipped to 142,000 on 20 November but has climbed since, peaking at 215,000 on 1 December, data from ChainCrunch shows. More recent figures show 165,000 on 6 March.
On 2 February Wormhole, a bridge between the blockchain-based smart contract platform of Solana and Ethereum had been attacked by hackers stealing more than 120,000 wrapped ether (wETH) worth around $320m.
The wormhole is a communication bridge connecting Solana to other decentralized finance (DeFi) networks allowing users to transfer cryptos between blockchains without using decentralized exchanges (DEX). This latest attack will again raise concerns about the security of decentralized finance platforms and in particular Solano.
Although the stolen value has since been “restored” according to Wormhole in a tweet on 2 February, such attacks can cause a lack of confidence in the market and in Solana in particular which has been criticized for sacrificing security in favor of efficiency.
Solana price analysis
The SOL price traded below $1 from its launch until July 2020 and reached the $2 level in January 2021. The price began to take off as the broader cryptocurrency markets rallied, climbing to an intraday high of $58.30 on 18 May.
SOL then fell back and bottomed out at $22.18 on 19 July in line with the markets, which started a new rally in late summer. SOL then broke out in September, soaring to a fresh intraday high of $214.96 on 9 September as adoption increased. The markets dipped in late September before rallying again, and SOL set another new intraday high of $260.06 on 6 November. The price then fell back to the $200 level as the larger cryptocurrencies like bitcoin (BTC) and ether (ETH) also retreated from their own highs.
Digital asset fund inflows into Solana were $0.7m in the week ending 18 March, according to weekly reports from CoinShares.
So what are the analysts’ SOL coin price predictions for 2022, 2025 & 2030? Is SOL worth investing in?
Solana (SOL) price prediction: what are SOL’s expectations for 2022 – 2030?
At the time of 24 March, its short-term outlook was neutral with SOL trading at around $100, according to CoinCodex. 18 technical analysis indicators were giving bullish signals and 11 bearish signals. CoinCodex’s solana prediction was for a gain of 23% to $105 by 29 March.
The SOL coin price prediction from WalletInvestor was a bullish forecast. Its SOL crypto price prediction being the price could have a strong 2022 hitting $207.3 in a year’s time. The algorithm-based site’s projection was that the SOL price could rally to $678 by March 2027.
DigitalCoin’s Solana crypto price prediction was less bullish, estimating that the coin could remain well below the $1,000 level during its seven-year forecast period. Its predictions were that SOL could average $131.5 in 2022, reaching an average of $193 in 2025 and $460 in 2030. The site bases its Solana coin price predictions on historical data.
The long-term SOL prediction from PricePrediction put the price at an average of $126 for 2022, $359 in 2025 and $2,212 by 2030.
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong. But according to the statements we see above it clearly says that it’s not too late to invest in SOL, because its future is really bright.