- Solana has rebounded over 80% in the last month despite the damage from its ties to FTX, which caused its price to plummet.
- Developers continued building on Solana even when its future looked grim, growing the developer base 40% year-over-year. Investors took notice and bought in.
- Some investors see similarities between Solana now and Ethereum after its first bear market, betting on a similar comeback trajectory.
Solana has staged an impressive recovery over the past month, bouncing back after its close ties to FTX caused its price to plummet. Many had written off the network, but Solana has surged around 80% in the last 30 days. What factors are driving this revival?
The FTX Fallout
Solana was hit especially hard by FTX’s collapse due to their close business relationship. The Solana Foundation held FTX equity and FTT tokens, while FTX invested heavily in Solana and Solana-based projects. When FTX went under, the value of Solana’s treasury shrank. Additionally, the SOL that FTX held passed to liquidators, putting further downward pressure on the price.
Renewed Support from Developers and Investors
Despite predictions that Solana was finished, developers continued building on the network. Solana’s developer base grew 40% year-over-year. Investors took notice of Solana’s resilience, sensing an opportunity for a short squeeze. With so many short positions piled up expecting further declines, a sharp rally ensued as shorts were forced to cover their positions.
Bullish Comparisons to Ethereum
Some investors point to similarities between Ethereum after its first bear market and Solana today. After declines in 2018-2020, Ethereum came roaring back in 2021. Traders are betting on a similar trajectory for Solana. They also note Solana is outperforming Ethereum in recent price action.
Conclusion
A combination of speculative trading activity and renewed faith in Solana’s technology is fueling its revival. However, risks remain from FTX asset sales. But if Solana can put the FTX debacle behind it, bulls believe considerable upside potential lies ahead.
