Nicole WillingThe price of SOL, the cryptocurrency that runs on the Solana blockchain, was one of the few coins to trade higher on 8 June as the market saw another broad selloff. While SOL gained 8.52% during the day, bitcoin (BTC) fell by more than 0.2% and ether (ETH) dropped by 2.9%.
Hovering around $43.31 on 9 June, the SOL price has bounced up by nearly 100% from the 23 May low, although it remains 25.7% below the all-time high reached earlier on 18 May.
So, what is Solana and why is the price of its native cryptocurrency finding support?
In this article, we look at the latest SOL coin news and its price predictions.
Solana develops high-speed Ethereum rival
The Solana Labs project was founded in 2017 by Anatoly Yakovenko, a former engineer at Qualcomm (QCOM) and Dropbox (DBX), along with a colleague from Qualcomm, Greg Fitzgerald. They were joined by several other former colleagues and launched the Solana protocol and SOL token in April 2020. The Solana Foundation, which is developing the open-source project, is based in Geneva, Switzerland.
The Solana blockchain aims to challenge the Ethereum blockchain as a basis for decentralised finance (DeFi) by offering high-speed transaction processing and low fees. Solana processes more than 1,000 transactions per second, compared with 14 on the Ethereum network, real-time data from Blockchair and Solana Beach show. Solana’s maximum theoretical throughput is 50,000 transactions per second, according to its website.
Solana uses a hybrid protocol combining its proof-of-history (PoH) consensus algorithm with the proof-of-stake (PoS) consensus. PoS is more efficient and less energy intensive than the original proof-of-work consensus used by early blockchains like Bitcoin.
There are more than 250 projects in the Solana ecosystem. Solanax, announced this month, will be an automated market maker (AMM) that uses the Solana blockchain to facilitate fast and low-cost trade on a decentralised exchange. It plans to launch in the first quarter of next year. Last week, GTS, which is one of the largest electronic market makers in the New York Stock Exchange, said it will join the Pyth Network, a decentralised platform that aggregates data on the Solana blockchain.
There were unconfirmed reports this week that Solana is raising between $300m (£211m) and $450m, after a smaller funding round in March was oversubscribed.
In May, the Solana Foundation announced an investment partnership with the MATH Global Foundation to invest $20m to support developers working on projects in the Solana ecosystem. And last week, Solana reported it was launching a $20m fund with South Korean blockchain accelerator ROK Capital to accelerate Solana’s expansion into South Korea.
The latest funds come after Solana announced in February that the Block Dream Fund, the investment arm of the OKEx cryptocurrency exchange, launched a $20m fund to accelerate the development of projects in the Solana ecosystem.
SOL price analysis: the coin bounces up from May selloff
The SOL cryptocurrency has climbed from 42nd in the list of cryptocurrencies by market capitalisation in February 2021 to 11th place, according to CoinMarketCap. There are more than 272.6 million coins in circulation, with no fixed supply.
According to the Solana website, the network launched “with an annual inflation rate around 8%, set to decrease by 15% a year until a long-term stable rate of 1.5% is reached”.
The SOL crypto price fluctuated between $0.50 and $1.50 in 2020, rocketing to an all-time high of $58.30 on 18 May 2021 in line with the strong rally across the cryptocurrency markets. The subsequent crash in prices pulled the coin back down to $19.14 on 23 May.
The coin then moved up to $35.53 on 27 May, retreated to $25.65 on 30 May, and has been trading between $30-$45 in June, reaching an intraday high of $44.10 on 8 June. On9 June, SOL was worth $43.
Will the price continue to recover amid news of the $450m financing, which led some industry observers to include Solana as one of the so-called “Ethereum killers”?
Solana (SOL) price prediction: what is the long-term outlook?
Short-term sentiment on the SOL coin is bullish, technical analysis from CoinCodex shows.
The daily and weekly simple moving averages and exponential moving averages are indicating the coin is a buy, whereas the Hull moving average is indicating a sell signal. The relative strength index (RSI) and the moving average convergence divergence (MACD), which are also popular indicators, are neutral.
With SOL trading around $43, there is technical support at $36.01 down to $27.61, and resistance at $44.41 and up to $52.81.
The SOL coin price prediction from Digitalcoin is also bullish, projecting that the price will average $62.01 in 2021 and rise to $76.9 in 2022. Over the longer term, it forecasts the price will average $125.84 in 2025 and $185.24 in 2028. In December 2028, the price is expected to average $200.6.
In its SOL crypto price prediction, forecasting site Wallet Investor predicts the price will climb from $49.29 at the start of July to $96.39 by the end of December, and then double to $190.59 by the end of 2022 and increase still further to $473.90 by the end of 2025.
The Solana (SOL/USD) forecast from the Economy Forecast Agency estimates the price will rise from an average $53.10 per share in June to $93.68 in December, then advance to $144.92 by the end of 2022 and $239.80 by July 2025.
FAQ
Where to buy the SOL crypto in 2021
You can buy SOL on cryptocurrency exchanges including Binance, Huobi and FTX. If you buy the token, you should transfer it to a software or hardware wallet for secure storage.
Alternatively, you can start trading SOL though contracts for difference (CFDs) today on Capital.com.
CFD trading allows you to speculate on the coin’s price fluctuations without having to buy and store the actual token. If you expect the price to rise you can open a long position. If you think it will fall you can go short and still make a profit.
Trade SOL to US Dollar - SOL/USD CFD
As a leveraged product, CFDs are designed to maximise gains, which can be large on volatile assets such as cryptocurrencies. However, you should be aware of the high risk involved because leverage also magnifies losses if the asset price moves against your position.
Learn more about crypto CFD trading with our comprehensive guide. Create an account with Capital.com and start trading SOL and other cryptocurrencies with CFDs today.
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