Solana was among the top-performing crypto in 2021. The altcoin began this year ranking 120 by market capitalization and finished at the 5th spot, surpassing assets like Polkadot and Cardano. Solana saw lucrative sessions, and some analysts believe the token may rival Ethereum. The blockchain is quick, with transaction costs less than what Ethereum charges.
However, the token has suffered so far in 2022. The alt stayed nearly 17% down since the year started and around 45% lower from the November peaks. Here is why the token fell and what investors might take from the actions.
The Overall Crypto Market Crashing
The cash invested in crypto dropped by nearly 30% since November. Global economic factors contributed to the crypto market struggle. The Fed Reserve declared a tighter stance after months on monetary stimulus.
Besides other measures, it now seems like the US Fed might increase interest rates starting March, early than what individuals expected. Such developments, plus the Omicron strain, had the crypto market crashing as investors dodged riskier assets.
Solana’s Technical Issues
Solana’s remarkable growth hasn’t been without trouble. The platform, which hosts more than 1,000 projects, has suffered multiple outages over the last six months. The worst happened in September when the ecosystem crashed for about 17 hours. Some individuals view that as a usual growth pain, while others this Solana might have concentrated on speed and forgotten about security. Technical challenges added to the unease.
SOL Might Have Been Due for Correction
Speculation is among the challenges with crypto investing. Most individuals buy digital coins to enter the craze amid price surges. That has the prices drive to unsustainable zones. Meanwhile, evaluating crypto assets using their fundamentals is not easy as buying stocks.
You cannot utilize the crypto’s cash flow or earnings to predict the price since cryptocurrency projects do not have to publish financial information. Nevertheless, crypto investors can follow some metrics, but things appear to differ compared to stock investing.
Solana recorded massive surges for multiple months, attracting investors. The token started rallying in July and extended the uptrends to November. Every critic about SOL bursting after a colossal upsurge met another suggesting the alt can overtake ETH. Meanwhile, Solana surprised many, plummeting following an 11,000% surge in 2021.
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