Solana has had an impressive start to the new year, with its value surging by 61 percent in the first 10 days. In each of the past two trading sessions, Solana has surged by over 10 percent. However, its price seems to be correcting today, which has seen its value drop by a percentage point in the past few hours.
Is Solana’s Recovery Long-term?
Cryptocurrency Solana was once hailed as a game-changer, with its eco-friendly approach, faster transaction speeds, and more consistent costs positioning it as a rival to Ethereum. However, investors who put their faith in the token have had a difficult year. Solana’s market capitalization collapsed from over $55 billion in January to barely above $3 billion by the end of 2022.
One of the main problems for Solana was its association with Sam Bankman-Fried, the founder of FTX. Bankman-Fried, who is facing eight criminal fraud charges after his crypto exchange went bankrupt in late 2022, was one of Solana’s most vocal supporters, investing over half a billion dollars in the token. However, when FTX fell apart, investors also abandoned Solana, resulting in a loss of around $8 billion.
Fast forward to today, where Solana continues to show signs of recovery by surging by more than 60 percent in the first 10 days of 2023. However, there is still a question about whether the current price surge is long-term.
For starters, the current bullish trend is unlikely to be long-term due to the industry-wide bear trend. Solana, which is significantly correlated with the industry, is likely to start moving in the same direction as the industry, meaning another bearish trend for the crypto.
Another factor that might cause Solana’s price to reverse and continue the long-term bearish trend is if investors fail to return to the project. Following its collapse in November after the FTX bankruptcy filing, most investors remained pessimistic about the prospects of a Solana comeback.
As a result, the crypto traded sideways for almost two months. However, with the recent price surge, it’s possible that we might see investors returning to pre-FTX levels, and hence driving the value of the crypto back to what it used to be before FTX. But it might not be the case.
Therefore, my Solana price prediction for the next few trading sessions is to the downside. I expect it to continue the current bearish trend for the next few trading sessions, with a high likelihood of its price trading below the $11 support level. However, if it trades above $20 price level, it will invalidate my bearish trend analysis.