Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
Solana [SOL] has faced difficulties in gaining a strong foothold in the fiercely competitive DeFi sector. To address this, the network implemented strategies such as points programs to attract a more extensive user base.
Read Solana’s [SOL] Price forecast 2023-24
Solana co-founder Anatoly Yakovenko recently highlighted the lack of proper regulatory frameworks as the biggest challenge facing the blockchain industry.
He believed that the best way to overcome this roadblock was for regulators to implement a good regulatory framework that would ensure compliance.
SOL has shown a small course correction in recent days. At the time of writing, it was trading at $20.21.
The price rose by almost 30% after Ripple’s news [XRP] securing a partial victory in his legal battle with the US Securities and Exchange Commission (SEC) on July 13. But it could not sustain its price increase for long.
In its judgment, the United States District Court for the Southern District of New York found that sales of Ripple’s XRP tokens on crypto exchanges and through programmatic sales did not constitute investment contracts; Therefore, it is not a certainty in this case. But the court also ruled that the institutional sale of the XRP tokens violated federal securities laws.
The crypto industry immediately adopted this assessment, generating a price increase for tokens. But the coins could not sustain the price increase.
Solana’s reputation as an “Ethereum killer”
Even now that SOL is being touted as the “Ethereum [ETH] killer,” Anatoly Yakovenko, co-founder of Solana Labs, seems to agree with the idea of using Ethereum as layer 2 for the Solana blockchain.
Could it be possible that ethereum is a @solana L2? Probably more likely than you might think at first glance. L2s are bridge protocols that provide one-way security. In this setup, holders of Solana assets on Ethereum would have definitive guarantees that they can go back… https://t.co/XE5ETsxGIW
— toly 🇺🇸 (@aeyakovenko) July 2, 2023
Even Ethereum founder Vitalik Buterin is an admirer of the Solana protocol. When the SEC sued Binance [BNB] and Coinbase [COIN] In early June, it labeled several altcoins, including SOL, as securities. Buterin lamented the regulator’s focus on projects like Solana.
The only comment I want to make is that it makes me feel bad @solana and other projects are affected this way. They don’t deserve it, and if Ethereum ultimately “wins” by delisting all other blockchains, that’s not an honorable way to win, and in the long run…
— vitalik.eth (@VitalikButerin) June 30, 2023
Heading into 2023, SOL has been hovering around the $10 support zone. It was already in the grip of a downtrend dating back to November 2021, when SOL was trading at $200.
Just as investors began anticipating further losses in the crypto market in January, Bitcoin took off [BTC] climbed past $17,000 and shorter-term sentiment shifted to bullish.
Solana benefited greatly from this shift, posting a 175% gain in 21 days. However, it could not break the resistance zone of $26-$28, which has acted as support since June-November 2022.
We asked ChatGPT for its thoughts on Solana’s price, network health, and trajectory after giving it some relevant data points.
Can we get ChatGPT to make a Solana price prediction?
ChatGPT has been a remarkable chatbot and the updates over the past month have made ChatGPT 4.0 quite impressive. It is a powerful tool for learning and becoming well trained in a wide range of subjects. Still, we should remember that the bot is designed to mimic a human, and it is not necessarily guaranteed to be factually accurate.
The jailbreak version of ChatGPT would likely be even more inaccurate, as it is specifically instructed not to say no to anything the user requests.
And yet it is possible to make some guesses through the chatbot about what the future might bring, if we give it details about recent price movements.
What makes ChatGPT from Solana? Does the country see a path to recovery after the recent setbacks? Based on transaction fees and transaction speeds, ChatGPT seems to think Solana will be an Ethereum killer.
Source: ChatGPT
We have yet to update it on the challenges Solana and SOL investors have faced in recent months. Let’s start with the biggest dent in investor confidence:
FTX, where the freefall began
Sam Bankman-Fried, also known as ‘SBF’, was one of the most vocal proponents of the Solana Network. The community saw him as a credible and smart entrepreneur who was CEO of one of the largest crypto exchanges, FTX.
While Binance reigned supreme in terms of volume and token pairs, FTX gave it a run for its money. Competition is also good for the sector and serves customers.
Much has changed since then, and the SEC has charged Mr. Bankman-Fried with defrauding FTX’s equity investors, further alleging that he mixed FTX customer funds with Alameda’s to make secret venture investments. He faces more than 100 years in prison if convicted on all counts.
Not only has Solana’s reputation taken a hit, but the foundation has also sold a significant amount of SOL to FTX Trading and Alameda Research. This amounted to SOL 58.08 million, or 11% of the circulating supply at the time FTX filed for bankruptcy. It was valued at nearly $1.1 billion at the time.
As expected, Solana’s price fell in November, dropping 45% from November 11 to December 31, from $18.08 to $8. As rumors of FTX’s bankruptcy started circulating on November 5, SOL had already lost 50% the week before, when it was trading around $38.
As a result, SOL’s total losses from November 5, 2022 to December 31, 2022 were 79.4%.
Source: ChatGPT
ChatGPT certainly sounds optimistic, and early 2023 has gone extremely well for investors. And yet some network problems emerged, just like in 2022.
SOL exceeded expectations in January and February 2023
From January 1 to February 20, Solana rose 179.88% on the price charts, rising from $9.69 to $27.12. The explosive rally is partly attributed to Bonk; a meme coin introduced within the Solana ecosystem, modeled after Shiba Inu.
Part of the total supply of $99 trillion was dropped into the wallets of Solana users in December. The number of transactions per day showed a downward trend in the second half of December, but this reversed in early January.
The transactions soon gained momentum again. The introduction of the fun memecoin did a lot to move the community away from the dark, depressing shadow that the FTX debacle had cast on Solana.
Fueled by on-chain data and price action from the past few months, the jailbroken version of ChatGPT predicted a wild ride for Solana in the fourth quarter. SOL is said to reach an all-time high (ATH) price of $600 this quarter.
Source: ChatGPT
The network has suffered from troublesome outages in recent months, which could damage investor confidence. The chatbot agreed.
Source: ChatGPT
Predictions aside, what does price analysis tell us about Solana?
A look at Solana’s stats on the map
Source: SOL/USD, TradingView
At the time of writing, SOL was trading at $20.21. The price of the cryptocurrency has risen by more than 3% in the past seven days.
But SOL’s Relative Strength Index (RSI) and Money Flow Index (MFI) remained below the neutral 50 level. Are However, On Balance Volume (OBV) reflected an increase.
Is your portfolio green? View the SOL Profit Calculator
In conclusion, SOL’s numbers indicated bearish market sentiment at the time of writing.
Conclusion
While ChatGPT predicts a wild ride for Solana this quarter, its performance is hardly commendable. It is therefore crucial that traders do their own research before investing in any crypto asset.
