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Solana is Up 300% in 2023. What’s Going On?

By Evan Jones11/13/2023

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Solana (SOL) has had the most gains of any of the top 10 digital assets by market cap, even outpacing Bitcoin (BTC). Solana is known for its transaction speed and finality and has made gains of over 300% on the year, trading around $40 USD after starting 2023 at under $10 USD per SOL. 

Solana was performing very well in 2022 as well until the FTX collapse, so it’s perhaps no surprise that it was able to regain so much value. SOL does have a long way to go to get back to its all-time high of over $250 USD, but traders who bought in at the bottom are certainly pleased at current price. 

Let’s discuss why Solana is performing so well this year. 

New Partnerships

Part of what’s driving Solana’s price action this year is a slew of new partnerships for the blockchain network. In August, Solana’s payment protocol Solana Pay integrated with Shopify, allowing Shopify merchants to accept USD Coin (USDC) stablecoins via the blockchain. 

Then, in early September 2023, Visa, the global payments giant, announced that it was now using the Solana blockchain for stablecoin payments of USD Coin (USDC). The announcement came after news of their partnerships with WorldPay and Nuvei, who process debit and credit card payments for businesses globally. Now with the Solana deal, clients can choose to receive USDC stablecoins instead of fiat. 

The two new partnerships were seen as bullish by investors as evidenced by the sharp increase in price.

FTX Fallout Less Than Expected

The now collapsed FTX exchange was in fact one of the biggest backers and holders of Solana tokens. When the exchange collapsed Solana was the asset that took the biggest hit of any of the high market cap digital currencies. It was also expected that in the legal fallout, the FTX legal team would likely have to liquidate much of their Solana holdings, causing many to be wary of investing in the asset.

This led many to short the asset in the weeks leading up to Sam Bankman-Fried’s trial, but these shorts were squeezed and the asset has instead performed incredibly well. Overall, it was one of the most oversold assets of the past year, helping to explain its healthy recovery.

Cost and Speed of Transactions

One of the biggest drivers for investors into Solana is the simple fact that its transaction costs are extremely low and predictable (less than 1 cent), while being finalized quickly (less than 5 seconds). This is certainly one of the reasons Visa chose them, and it’s always nice as a blockchain user to have your transactions sent and finalized expeditiously. 

Don’t Forget About Previous Solana Network Outages

It seems like most of the newer articles touting Solana have forgotten about the network’s history of issues, namely outages where the network was down. Somewhat ironically, Visa even noted that part of their attraction to Solana was the resilience and redundant structure of the network making it always available to customers. 

It’s not like these outages were even all that long ago, the last one was in May 2022, just over a year and a half ago. That was in fact the 7th time the network had gone down in 2022 already, with it having happened 12 times in 11 months overall. 

While it’s certainly not a guarantee that the network will go down again, the fact that it has happened should be concerning to investors. It’s possible that if Solana’s network becomes more popular and utilized as it was during its previous outages, for it to occur again. Comparatively, the Cardano network has never gone down but offers many of the same advantages as Solana. A more mainstream comparison would be Bitcoin which has only gone down for 6 hours once, in 2013. 

Closing Thoughts: Positive Signs But Tread Carefully

Though Solana has experienced a strong 2023 thus far, it’s important to keep the network’s history in mind. New partnerships are exciting, but they aren’t guaranteed to be permanent, and there’s nothing preventing any new partner from finding a new one should Solana not end up meeting expectations. Be sure to do your due diligence before investing in any digital asset.

Article tags

Beginner
cryptocurrency
solana
Evan Jones

Author

Evan entered the crypto scene in 2017, attracted to the many disruptive possibilities that blockchain could have on current world systems. He has a keen interest in decentralized services, payment processing, and viable NFT use cases such as event ticketing. He spends his days writing with his dog Kobe under his feet, if not on his lap.

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