Solana Blockchain SOL Token Doubles From FTX-Crash-Induced Lows, but Will It Continue to Rebound?

SOL’s price has surged 114% so far this year, slowly recovering from losses from early November.

AccessTimeIconJan 20, 2023 at 2:34 a.m. UTC
Updated Jan 20, 2023 at 3:25 p.m. UTC
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Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.

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One of the hardest-hit tokens of 2022 has been an upbeat story this year.

SOL, the native currency of the Solana blockchain, has doubled its price since mid-December to hover around $21, reaching as high as $24 earlier this week, roughly where it stood before investors started fretting over its entanglement to beleaguered crypto exchange FTX and its sister company Alameda Research. Over the past week alone, SOL has risen 22%, and it is up 114% this year.

The surge started after a favorable tweet by Ethereum co-founder Vitalik Buterin, who expressed “hope” that the Solana community “gets its fair chance to thrive” in a tweet, shortly after SOL had plunged to a record low of $8.19. Buterin’s comment headed off damage from reports that the token was the second-largest holding of Alameda Research, the trading arm of FTX whose unruly balance sheet sparked FTX’s descent into bankruptcy protection, although SOL had already declined significantly prior to the FTX revelation.

According to data from DefiLlama, the total value locked (TVL) on the Solana chain dropped 96% in 2022, from $6.68 billion in January to $206 million at the end of December.

SOL’s price recovery has sparked fresh hopefulness among crypto analysts and blockchain developers and executives over the blockchain’s long-term future.

Critics have lambasted Solana for being too centralized and venture capital controlled. But Riyad Carey, research analyst at crypto data firm Kaiko, said that “with Alameda gone, the protocol is in some sense free of that baggage and can become more community-centric.”

“I think Solana definitely has a lot of staying power,” Carey told CoinDesk. “Will it be a top three or five chain by [total value locked] in a year? I’m really not sure but it certainly has potential.”

Detaching from 'Sam’s coin'

Messari senior research analyst Tom Dunleavy wrote in a recent research note that Solana’s on-chain performance has been strong, with daily active wallets interacting on major Solana protocols remaining constant post-FTX and transaction volumes and active accounts rebounding back to pre-FTX levels.

“It is certainly an open question as to how sticky this new level of volume is. However, at the very least, a consistent level of volume with FTX exiting the ecosystem is a positive sign,” he wrote.

Michael Repetny, core contributor at Solana-based liquid staking protocol Marinade Finance, highlighted that as SOL’s price declined after the FTX crisis, the number of validators also decreased from 2,400 to 2,000.

Repetny attributed Solana’s recent trading volume surge to growing interest in Solana-based meme coin BONK.

“Bonk is like an entry point to the Solana ecosystem, just like people come to non-fungible tokens (NFT) for gaming,” he told CoinDesk in an interview, adding: “With trust and faith in the Solana community, this goes beyond Sam’s coin.”

Rebound to $50

Stefan Rust, CEO of blockchain technology firm Laguna Labs, said Solana has “held the ground solidly” by staying within the top 20 cryptocurrencies by market capitalization post-FTX, while hitting the metrics developers seek, including a project's "distribution," "difficulty in using toolsets," "marketing and visibility" and "money." He expects SOL's price to rebound to $30 and even possibly $50 by the end of the year.

Brendon Sedo, a contributor to layer 1 blockchain Core DAO, compared Solana’s current status quo to Ethereum’s 2018 crash and believes that it will similarly rebound, despite increasing competition from the likes of rivals Aptos and Sui. “I think this is likely going to be the outcome for Solana, pulling off what Ethereum eventually pulled off after the dark days of the 2018 bear market,” he said.

“While it may take time to get rid of the FTX and Alameda baggage, in the long run it is possible that the loss of these toxic entities will lead to a more decentralized and equitable network,” said Akash Mahendra, portfolio manager at multichain digital wealth platform Yield App.

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Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.


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Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.