Solana rallied over 24% during the past 24 hours, hitting $45 at its peak. More impressive: It’s up nearly 80% in the past 30 days. On the face of it, analysts say we’re seeing a classic short squeeze. But driving that is a narrative that basically says that Solana is not only as good as Ethereum —it promises to replace it. For the longest time, SOL holders were derided as “Soylana Manlets.” The network was especially hard hit by the FTX debacle because FTX and Solana were heavily invested in each other. ETH/BTC VS SOL/BTC Bitcoin is the market leader in crypto, and because of that, traders often examine the price of coins against the value of BTC, instead of against the value of the dollar—the reasoning being that, if you can’t outperform BTC, you might as well leave your money in BTC. Lately, the price action on SOL/BTC has been far more attractive than that of ETH/BTC. In fact, many have called attention to how weak ETH looks when charted against BTC. Traders and speculators are also looking at Ethereum’s past as a potential hint to the future of Solana, because of the similarity between the narratives of ETH’s past, and SOL’s present. From April 2020 to Nov 2021, the price of Ethereum went from ~$100 to ~$4700. This came after ETH experienced its first bear cycle—a time during which many people made claims that ETH would disappear much like most of the ICOs of its time. They were wrong. Developers flocked to ETH to launch tokens and protocols, keeping attention and volume on it throughout the bear. ETH came back stronger than ever and was one of the top performers of the 2020-2021 bull market. Now, Solana is seeing a similar narrative. It had very close ties to FTX, so after the exchange’s collapse, many believed that Solana would never recover. Its showcase NFT project, DeGods, even left Solana for the Ethereum network. Yet despite this, developers continued to build and deploy products on Solana—and its resilience caught the attention of investors as a potential short squeeze. Especially critical to Solana’s resistance to the short sellers is its ardent developer community, which not only didn’t defect post-FTX, it grew. The number of developers on Solana actually surged by 83%, at least according to RockwayX, a European VC firm that invested in Solana. Even Ethereum-cofounder Vitalik Buterin publicly showed support for the developer community. According to Electric Capitals Developer Report, Solana currently has nearly 1,000 full time developers; by contrast, Ethereum has nearly 6,000. Likewise, Solana’s market cap is only 8% of Ethereum’s market cap, so it has a considerable way to go to make a more durable argument for its long-term success. And despite the short squeeze, it’s not out of the FTX woods yet. It still needs to deal with the liquidation of FTX’s assets. The FTX estate currently holds $120 million worth of SOL, and will undoubtedly liquidate as the company continues to unwind. But the Solana bulls say that once that overhang is dealt with, it’s up only for Solana.
Solana has seen impressive growth in the past 30 days, gaining close to 80%, driven by a narrative that implies the network may be better than Ethereum and could potentially replace it. Despite the collapse of FTX, developers have continued to build and deploy products on Solana, drawing the attention of investors. The number of developers working on Solana has also grown by 83%, and even Ethereum-cofounder Vitalik Buterin has publicly shown support for the developer community. The Solana market cap is only 8% of Ethereum’s, so it still has a long way to go to achieve long-term success, but the Solana bulls are optimistic that its future is looking up.
This is good news for the Solana network, as it is showing signs of growth and resilience, despite its close ties to FTX. The growing support from the developer community, investors, and even Ethereum-cofounder Vitalik Buterin is a promising sign for the future of Solana and its potential to replace Ethereum.
You can read more about this topic here: Decrypt: What’s Driving the Solana Rally?