Over the last few years, the crypto market has consistently proven to be one of the fastest-growing markets in the world. This is due to the industry’s innovations and the decentralised crypto economy, leading people around the world into financial freedom. Moreover, the inventions brought forth by the crypto industry are imparting significant contributions to traditional systems and markets led and managed by central authorities. Throughout 2022, numerous cryptocurrencies were launched into the crypto-verse. Of all these newly released coins, a few were deemed as top alternative cryptocurrencies for the year. This resulted from their sustainability, profitability, and the prediction of fast price growth in the near future. In addition, this was based on the total value of the current circulation coins and their market capitalisation. Solana was regarded as one of the top 8 best cryptocurrencies for 2022. However, all of this came crashing down when FTX declared bankruptcy, leading the currency to the brink of collapse thanks to its ties to FTX.
What is Solana?
As described in this Bitai Method review, an expert crypto resource, Solana is one of the most popular cryptocurrencies among more than 10,000 in existence. The cryptocurrency platform is called Solana, while the individual unit is a sol. This blockchain serves as a worldwide network that supports executable code in the form of smart contracts and a unique proof of history mechanism that enables the network to process thousands of transactions per second. Theoretically, Solana is capable of handling 50,000 transactions per second. Solana uses a proof-of-stake method and its proof-of-history concept to reach a consensus. Because nodes do not need to connect to validate a block, the network operates more quickly than others.
How did the FTX financial saga impact Solana?
Solana’s market value plummeted throughout the week of FTX’s financial difficulties and bankruptcy filing, and the business experienced an abrupt and significant drop. Solana traded at a record high of $259.96 in November 2021. Prices fell by 95% a year later to a low of $14.12. Data company CoinGecko offers basic cryptocurrency statistics that track price, volume, market capitalisation, community development, open-source code creation, significant events, and on-chain metrics, tracking and detailing Solana’s downfall. In addition to the aforementioned, the coin has lost 51.5% of its value since November 8th, 2022, or $5.5 billion in market value. This enormous fall ultimately caused the digital currency’s collapse.
Serum, a decentralised exchange platform developed on Solana where traders buy and sell cryptocurrencies, is connected to Solana. What’s intriguing is this: Sam Bankman-Fried, the infamous founder of FTX, actually created Serum. When it was discovered that FTX had violated its terms of service, which forbade the company from using customer assets, by misusing user funds to pay off their company loans and keep the company afloat, FTX took the easy way out and resigned. They hid behind Bankman-Fried’s trading company and Alameda, its sister company. A balance sheet containing proof of the misappropriation of consumers’ money was leaked to Coindesk.
Solana’s “miraculous” rise from the ashes
As mentioned above, due to FTX’s downfall, the market value of Sol declined enormously, leading to the collapse of the digital coin. Justifiably, many thought this was the complete end of the digital currency. However, Solana managed to beat the odds. The Solana community created the meme coin Bonk Coin (BONK) to reinvigorate itself in the wake of FTX’s demise and its impact on SOL. A decentralised application (DApp) that is a part of the Bonk Coin ecosystem enables users to burn some of their tokens in exchange for paying BONK by “bonking” a picture of Sam Bankman-Fried with a baseball bat. The market capitalisation for BONK is $51 million. Holders of Solana received an airdrop of 50% of the total supply of BONK tokens, which caused Solana to soar during the first week of 2023 and rise by 60% from its lowest low of $8.30 to a peak of $13.33.
More good news for SOL holders
2023 is seemingly off to a good start for this digital currency and those who hold its coins. Not only did Solana peak and increase in market value within the first week of 2023, but it is also rallying ahead of other altcoins even within the second week of the year. At the time of writing, Solana’s market value has been reported to have spiked by 21%, leading the digital coin to trade at $16.04. Not only is this an incredulous turnaround for the digital currency after its rapid and unforeseen collapse, but this gives evidence to the fact that Solana was justifiably marked as one of the top alternative cryptocurrencies for 2022, as it is the first cryptocurrency to have the “best first week of the year” out of any top 20 altcoins, despite Bankman-Fried nearly bringing the currency down with his collapse.
Despite market activities, there are encouraging statistics that indicated that Solana is indeed efficient, sustainable and profitable.
The volatility of digital currencies is well known. Such cycles of highs and lows are unavoidable, particularly given that a currency can be positively impacted by both minute and significant events. The most important factor is determining whether the coin is scalable and sustainable by examining its core operations, efficiency, and whether there has been constant growth since its inception.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.