Solana rallied more than 24 percent in the past 24 hours, hitting a high of $45. Even more impressive: it's up almost 80% in the last 30 days.
On the face of it, analysts say we're seeing a classic short squeeze. But driving that is basically the narrative. Solana It's just not as good Ethereum– Promised to replace.
For a long time, SOL holders were called “Soilana Manlets”. The network was particularly hard hit by the FTX debacle, especially since FTX and Solana were investing in each other. FTX has invested in both Solana and projects built on top of it. For example, with the Solana Foundation, FTX jointly created the serum, which is now discontinued DeFi A protocol which, at the time, was the backbone of the Solana Diffie ecosystem.
The Solana Foundation also holds several million dollars FTX common stock and FTT tokens. This means that when FTX goes down, the Solana is reduced in size by the Treasury and also the SOL containing the FTX is now transferred to liquidity.
But thanks to the growing developer support-the developer base It has grown over 40% year-on-year.– and Solana's growing group of true believers refused to die. The Solana vs. Ethereum debate has become one of the most talked about topics on Crypto X/Crypto Twitter these days.
Basically, Solana's advocates in 2010 Stock confirmation Blockchain's novel technology is faster, more scalable and cheaper to use than Ethereum. blockchain. (Here A complete explanation of the network infrastructure with Ethereum.)
Bitcoin It is the market leader in crypto, and because of this, traders often analyze the value of coins in terms of BTC value, rather than dollar value – because, if you can't increase BTC, well, leave your money in BTC.
Recently, the price action on SOL/BTC is more attractive than ETH/BTC. In fact, many have pointed out how weak ETH looks compared to BTC.
ETH/BTC chart. Image: TradingView
The eth/ethbtc fud thread in the last couple of weeks
(These are probably not all srs, but only add to the strength of the narrative)
— Jay (@0xjaypeg) October 31, 2023
Traders and speculators see Ethereum's past as a clue to Solana's future, because of the similarities between ETH's past and SOL's current narratives.
From April 2020 to November 2021, the price of Ethereum dropped from ~$100 to ~$4700. This came after ETH experienced its first bear cycle—a time when many people claimed that ETH would disappear, as most Icons at the time.
You are wrong. Developers have flocked to ETH to launch tokens and protocols, keeping the focus and volume on the bear. ETH came back stronger than ever and was one of the top performers of the 2020-2021 bull market.
Now Solana is seeing a similar narrative. He had a very close relationship with FTX, so after the collapse of the exchange, many believed that Solana would never recover. His demo NFT project, DeGodsHe even released Solana for the Ethereum network.
Yet despite this, developers continue to build and deploy products on Solana — and its resilience has attracted the attention of investors in the short term.
Patrick Felder, Co-Founder and CIO at Prismatic Capital, explained that “all elements have invested in ETH, but they are putting money into SOL from time to time. “After FTX liquidators leave their time to sell their assets, everyone is actively shorting SOL or talk Shortening about SOL.
All those shorts, he says, have created an imbalance that is being exploited by SOL true believers. “In terms of layout, things quickly became unscientific. Solana has a tough community, so there are a lot of people coming together for the next cycle. It is a classic short press arrangement.
Solana developer community
Solana's most critical counter to short sellers in particular is its dedicated developer community, which has not only remained intact since FTX, but has grown. The number of developers on Solana increased by 83%At least according to RockawayX, a European VC firm that invested in Solana. Even Ethereum founder Vitalik Buterin has publicly shown support for the developer community.
Some smart people tell me that there is a bona fide smart developer community in Solana, and now that the scary lucky money people have washed away, the chain has a bright future.
It's hard to say from the outside, but I hope the community gets a fair chance to develop 🦾🦾
— vitalik.eth (@VitalikButerin) December 29, 2022
The number of developers working on a layer-1 blockchain is a critical metric. In crypto you don't pay developers to build on your blockchain, they have to choose to do it – and take the risk of learning a blockchain-specific language without knowing that the blockchain itself will last.according to Electric capital developer reportSolana currently has nearly 1,000 full-time developers. In contrast, Ethereum is around 6,000.
Likewise, Solana's market cap is only 8% of Ethereum's market cap, so it has a long way to go to make a more sustainable argument for its long-term success. And despite the brief squeeze, FTX is not out of the woods just yet. It still has to deal with filtering FTX properties. FTX's estate currently holds $120 million worth of SOL, which will undoubtedly disappear as the company continues to unwind.
But the Solana bulls say that's only for Solana after the overcrowding.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and are not financial, investment or other advice.
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