Dominic Basulto, one of the analysts of the consulting giant The Motley Fool, made statements for an altcoin that has recently come to the fore with its decline. The analyst argues that “bottom hunting” should be done for the popular altcoin Solana (SOL), which has lost more than 90 percent over the past year. Here are the details…
Analyst points to Solana, controversial altcoin project of 2022
It’s clear that Solana has had a truly disastrous year in 2022. Although it has risen a bit since the start of the new year and is currently priced at around $13, the cryptocurrency is still down over 94 percent from its record high. As we reported as Kriptokoin.com, it had risen to $260 in November 2021. Against this background, of course, many investors are throwing the towel at Solana, frightened by the ongoing fears of an FTX contagion. However, we may finally be seeing a market bottom for the cryptocurrency, or we may have already. With that in mind, there is an ultra outlier to invest in Solana even at such a low price point.
Admittedly, Solana is particularly vulnerable to the risk of FTX contamination due to her close ties to former FTX CEO Sam Bankman-Fried and the hedge fund Alameda Research, which she controls. But we already knew this in early November, when the FTX meltdown began, according to the analyst. The market had apparently priced in all possible bad news scenarios and pushed Solana down to the bargaining floor.
Therefore, it is particularly confusing for Solana to drop once again after seemingly stabilizing at the $12 to $13 level. The best explanation for the new round of sales is that the entities controlled by Bankman-Fried or FTX are liquidating their Solana positions in preparation for bankruptcy protection. This new round of sales could cause other big owners to sell out. At some point, it can cause a panicked run to the exits.
In the long run, Solana’s fundamentals are solid.
However, the analyst states that many of these FTX contamination fears are exaggerated. According to the analyst, it’s important to understand that people aren’t selling Solana because it’s a bad project or because it’s done something wrong. They are selling Solana primarily because of its old relationship with FTX. Solana continues to be a major player in various Blockchain industries, including NFTs, Web3, and gaming. In fact, crypto’s growth in the first nine months of 2022 was particularly notable, as crypto research firm Messari recently pointed out.
In the third quarter of 2022, Solana’s NFT business grew approximately 20% quarter-to-quarter, as measured by new NFTs daily. As a result, Solana is now the No. 2 player in the NFT market when measured by secondary sales volume. Even after the FTX collapse, Solana continued to grow. For example, Solana NFTs for November saw a 42 percent increase in trading volume at a time when other competitors were struggling. So, while the overall NFT market has been in a bearish trend since May, Solana remains a bright project.
Solana made a special point of reassuring its developers in the wake of the FTX collapse, and has planned a grand tour of the developer community around the world in 2023. Also, Solana has a number of high-profile product launches planned for 2023 that could change the perspective of investors. For example, it continues to move forward with its Solana Mobile strategy, which it will likely integrate with the Solana Pay strategy. When Solana Mobile and Solana Pay come together, it can result in a first-of-its-kind Web3 payment system, activated by a “crypto phone”.
The decision to buy Solana is risky
According to the analyst, this is not about buying this bottom. Solana fell too fast for this to be considered a “fall”. Deciding to buy has become much more risky and speculative. If you’re buying Solana now, it’s because you believe in its long-term plans and are willing to wait a considerable amount of time for its price to recover. SOL was trading close to $37 during the FTX meltdown in November. Therefore, according to the analyst, it is not impossible for Solana to regain that level as soon as the FTX drama begins. This represents a return on investment of about 270 percent. The analyst uses the following statements as a result:
While the short-term outlook is admittedly risky for Solana, I’m in favor of long-term bullishness. There is too much long-term value in crypto that cannot be ignored. We don’t know when the exact market floor for this will happen, so I wouldn’t recommend trying to time the market. Instead, it makes more sense to collect Solana on the way down and patiently wait for the sun to rise.