The days of breaking records and hitting all-time highs in crypto prices now seem like a distant memory. 2021 blessed crypto enthusiasts with massive gains all through summer, and the crypto crash of 2022 have subjected these digital assets to giving back the profits they accumulated during the impressive bull run.
We have to look at precisely what started the crypto crash this year. It is important to note that digital assets were not alone in this downturn, as the stock markets have also taken a plunge due to the efforts of the U.S. Central bank to tame inflation by raising inflation rates of interest and cracking down on monetary supplies.
Why is crypto crashing?
It is important to note that crypto investing has never been for the faint-hearted, as digital assets have been known for their volatility, and these price fluctuations have been seen from time to time. However, at every point of instability, the driving force may differ; it is advantageous to remember some established investing guidelines.
Crypto prices can be affected by inflation, interest rates, and other macroeconomic factors that can sway people’s confidence in investing in these altcoins.
Another major factor that influenced the downtime crypto is currently experiencing was the government actions by regulators worldwide. As the interest in cryptocurrency grew in 2021, government officials began speculating what this popularity means for monetary policies, security, and the environment.
On the 24th of September 2021, the Chinese government aggressively cracked down on crypto regulations, declared cryptocurrency transactions illegal, and restrained overseas exchanges from doing business with the people in China; upon the release of this news, the prices of crypto took a turn for the worst.
The prices further plunged in 2022 as the crypto market has been bracing for action from the United States government on multiple fronts. From the raising of interest rates to fight inflation to the development of Oversight plans on crypto by the Biden Administration
What Does The Crypto Crash Mean For Solana?
A cyber attack shook the cryptocurrency world, and Solana was the main casualty. This cyber attack drained over $7 million from Solana-based non-custodial crypto wallets. SOL, SPL, and other cryptocurrencies of the Solana ecosystem were stolen from their investors.
Solana started its rise to glory in 2021 when it went from almost $2 at the beginning of the year to about $56 by May, and this bullish run didn’t peak until November 2021, when it hit an all-time high of $260. This run was in line with the general high all cryptocurrencies were facing at the time, and just like bitcoin and Ethereum, Solana’s price took a hit during this decline, albeit not as much as bitcoin and Ethereum.
Solana, similar to one of the trendsetters in the crypto world, Ethereum, was affected by actions taken by investors awaiting the Ethereum merger.
Solana and some other cryptocurrencies have been known to underperform whenever faced with hawkish behavior by the U.S. federal reserve. There was no exception to the rule when the Federal reserve cracked down on its fight against inflation by raising interest rates.
Will Solana rise again?
As of April 2022, technical analysis by TradingView stated that Solana was ranked the 7th biggest crypto asset. According to its market capitalization, Solana was also included as one of the “coins that would blow up in 2022”. Crypto experts and enthusiasts have also predicted that Solana will begin to experience an uptrend from its current price, and steadily but surely, it’ll climb in its costs. According to their prediction, the average price for Solana by November 2022 might be around $36, and in December 2022, the maximum value might be as high as $39.
Conclusion
Solana suffered from the crash like every other cryptocurrency, but experts believe it’ll rise again. Some of the advantages Solana has is the fact that they’re one of the greatest assets in the smart contract blockchain space.
Although they have been faced with issues of power outages, they have implemented a series of protocol updates that show promise. In addition, they have managed to build a robust NFT ecosystem which would prove to be a great deal for their expansion into the metaverse shortly.
It’s safe to say the Solana blockchain has proven to be very efficient and stable. It also offers low transaction fees for investors. All of this gives the coin a fighting chance as a good long-term investment as far as cryptocurrency is concerned.
