Solana Emerges as Crypto's 2023 Comeback Star
Solana gains more than 400% YTD in a massive comeback as the network sees a resurgence in activity due to network upgrades and other factors.
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2023 is the year of comebacks for the crypto industry, and the biggest comeback story is not Bitcoin; it is Solana. After the series of unfortunate events in 2022 that started with Terra UST collapse and worsened with FTX bankruptcy, crypto needed a turnaround. So far, it looks like it has gotten it.
With institutional investors such as BlackRock showing interest in Bitcoin, the positive performance of the flagship asset has lifted other cryptocurrencies. But Solana has been the biggest beneficiary as the altcoin is the best performer of the bunch.
SOL is up 454.79% YTD, going from below $10 on January 1 to its current price above $50. By comparison, BTC increased 126%, while other large-cap altcoins such as ETH, ADA, and XRP have only seen double-digit gains.
The price rebound for Solana is very impressive, given how deep it plunged in the aftermath of FTX bankruptcy. SOL fell 96% from its ATH, and its active addresses, which were at 1.28 million in May 2022, dropped to around 160k by September 2023. Solana TVL also plummeted from above its $9 billion peak to $235 million by January 2023. All these led to the exit of popular projects such as DeGods and y00ts NFTs.
Solana Resurgence
SOL is trading at $55 per CoinGekco after gaining 70% in the last 30 days. Before that, the cryptocurrency had been slowly recovering along with the rest of the crypto market. But bullish signals became clear around mid-October. Between October 15 and November 16, SOL went from $22 to $65 before a price correction caused retractions. Despite those gains, SOL is still about 80% below its peak of $259.96.
Nevertheless, the performance highlights the resurgence of the network. Evidence of this abounds in the increase in daily active users, non-fungible token transactions, and the total value locked. Artemis data shows Solana's daily active addresses as of November 26 were 30.05k.
This is the second highest among all L-1 blockchains as it is only behind NEAR protocol and ahead of other networks, including Ethereum mainnet. However, layer-2 chains such as Polygon, Arbitrum, and Optimism have more daily active users.
NFT sales volume on Solana also increased by 134.83% in the last 30 days, even though the total transactions have fallen. The network DeFi TVL has also increased by 98.65% within that period and is now at $597 million.
What is Driving Solana Resurgence
Solana's resurgence is due to several developments in the ecosystem. These include the launch of its Saga mobile phone in April and its decision to reduce price in August due to declining sales.
More recently, there have been upgrades to the network. Such updates have made it easier to be a validator on Solana and added the option of using zero-knowledge-compatible encryption for better security. Firedancer, a new independent validator client built by Jump Crypto, has been deployed on the Solana testnet.
Other factors contributed to the turnaround, such as the inflows into SOL-focused digital asset funds, Solana's partnership with other crypto projects, and its NFT community.
Meanwhile, the robust technology underlying the Solana network and community also contributed to its resurgence. Even when it was at its lowest, many projects, including Helium, chose Solana over other chains due to its superior technology.
