Dominic Basulto, an analyst at the US-based consulting firm The Motley Fool, drew attention to a popular altcoin project. The analyst took Solana (SOL), which is trading below $30, and discussed whether it is suitable for investment in the current situation. Here are the details…
What about the altcoin that has been moving up and down lately?
So far in 2023, Solana (SOL) has been one of the highlights in the crypto market, as we have also reported as Kriptokoin.com. It is up 76.38 percent in the last 30 days and is currently trading at $23.34. This is welcome news for Solana investors, who feared that FTX’s price could crash to zero after its catastrophic November crash. The only problem is that, according to analyst Basulto, Solana is currently “overheating” and his earnings are far beyond traditional market leader Bitcoin (BTC), which itself has seen an impressive 36.10 percent increase over the past 30 days.
Now the question for investors is: should they continue to buy Solana while it’s under $30? To calculate a fair value for Solana, it’s worth considering its ups and downs over the past three months, according to the analyst. Before the FTX scandal, it was trading at $ 37. However, in just a few days, it fell below $14 on fears that the crypto could be pulled down due to its extensive ties to former FTX CEO Sam Bankman-Fried.
At the end of 2022, Solana was trading below $10, with many investors saying it could drop to zero. It closed the year with a 94 percent decline. But then we turned the page to a new year, and Solana just got on a rocket. Investors clearly overreacted on the downtrend and are now overreacting on the uptrend. It’s the only way to explain the meteoric fall and rise. Therefore, the analyst considers the fair value of Solana to be above $30. Because it’s probably going back to where it was before the FTX scandal. The only question is how long it will take to break $30.
Solana’s fundamentals are improving
Aside from investor perceptions, there is a lot below the surface that investors may be ignoring right now that could push Solana higher. For example, it is taking extensive steps to improve the performance and reliability of the Blockchain network. This was one of the biggest complaints filed against Solana in 2022, and the good news is it’s about to release new improvements aimed at limiting network outages. In addition, Solana is taking steps to consolidate its living ecosystem.
In 2022, the number of developers on Blockchain increased by 83 percent and is currently second only to Ethereum (ETH) in terms of monthly active developers. This greatly diminishes the idea that developers, creators, and users are abandoning it for their competing blockchain. Solana is also trying to make Blockchain more attractive for staking. This will help boost Solana’s relatively weak numbers when it comes to total locked value (TVL), an important metric for assessing the health of a given Blockchain ecosystem. Staking is a way to lock in value and therefore a key driver of TVL.
New Web3 initiatives support the network
However, the main reason the analyst is optimistic about the future of crypto has to do with new Web3 startups. At the end of January, Solana’s founders released an optimistic report detailing the many Web3 projects that will support future growth. The report showed how Solana approaches Web3 from a number of different angles. It also helped to show how all these initiatives are part of a central, defining vision.
Whether it’s new mobile networks, new streaming platforms or new decentralized finance (DeFi) platforms, Solana is reimagining the future of the web around crypto and blockchain. It will soon roll out physical hardware such as the new “cryptophone” that will help users harness the full power of Web3.
Analyst says “long-term bullish” for altcoin
For the above reasons, the analyst says he is hopeful for Solana in the short and long term. If the analyst can post signs of success with his Web3 strategy, then he thinks $30 is just the starting point, not the end. In August 2022, Solana was trading near $50, so this might be a more reasonable price target. That means the price will almost double, but given the recent rocket trajectory, that level is certainly within reach.
The biggest caveat here is that some of the bullish momentum around Solana appears to be slowing down. For example, at one point, the coin rose more than 100 percent over the year and seemed to have no limit. That’s why it’s crucial to pay attention to Solana’s long-term strategy, according to the analyst. As a result, Basulto concludes his analysis by stating, “I am confident that the underlying fundamentals and living ecosystem are strong enough to make it a long-term purchase.”
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