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Total-Value-Locked in Solana tanks down over 90%! Here’s everything you should know

Solana Price Prediction

KEY TAKEAWAYS:

  • Solana, by far, has been one of the poorest performing cryptos amongst the top and the most popular cryptos out there.
  • SOL price hasn’t participated in the overall crypto market recovery that we saw recently, that was led primarily by Ethereum and Bitcoin at the helm.
  • Solana’s ecosystem has lost out most of its total-value-locked too, from its highs exactly a year ago.

Once heralded as an ‘Ethereum killer’, Solana has seen better days. It had everything that a true blockchain network needed to make it successful – it was fast and cheap to transact on the blockchain without having to compromise on the security of the network. With transaction speeds well over 200 transactions per second, and over 111 billion transactions routed through the network – it was well on its way to actually beat Ethereum.

But, over the past year, it has had to deal with numerous breaches on its chain, some even amounting up to $100 million in the past year alone. It has suffered several network outages too, which isn’t something that is expected out of a high performance blockchain network.

But notwithstanding that, two social media platforms run by the company now called Meta, Facebook and Instagram now support NFTs minted on the Solana platform. Considering the huge audience that these two platforms still command, this move will unarguably impact the network for the better.

Read more: Top Decentralised Exchanges 2022

SOLANA TECHNICAL OVERVIEW

SOL/USD | Source: Tradingview

From the chart above we can clearly see that Solana has been trading within a range (between the trendlines marked in blue). Ever since the month of May, post the tragic $60 billion implosion of the Terra LUNA ecosystem – SOL price has remained stuck under the $50 mark. This price level would be very difficult for SOL to breach out, especially with a huge amount of short positions that can be expected to be created along that trendline.

While SOL price is technically trading on the 50 day moving average, with a Relative Strength Index value of about 55 for the price trend – it can be safely concluded that SOL price trend remains firmly flat to bearish. It is trading very close to the lower trendline and if we see a breakdown below it – Solana price could see a crash from there on. But with bearish technicals, what do on-chain metrics have to say?

Read more: Solana Price Prediction

SOLANA TVL NEAR ALL-TIME-LOWS

Solana TVL | Source: Defillama.com

According to data from Defillama.com, Soana’s total-value-locked has taken a massive nosedive, from its all-time-highs back in October-November 2021, when the crypto market had peaked out. It has fallen all the way from above $10 billion in TVL to now under a billion, at about $954.92 million as of writing. This is a crash of over 90% and has seriously affected all the ecosystems that were built on and were running on the Solana platform.

In fact according to data from crypto data analytics platform Messari – Ethereum based L2 platforms like Arbitrum and Optimism have flipped Solana’s entire ecosystem in terms of TVL.

SOLANA’S SHARPE RATIO IN THE NEGATIVE ZONE

Solana Sharpe Ratio | Source: Messari.io

Before we get into the interpretation of the chart above, let’s quickly understand what a Sharpe Ratio is. Sharpe Ratio is a value that compares the return on an investment with its risk. It is essentially a mathematical expression reward to risk from past values and points to the future.

Thus, with a Sharpe Ratio value for SOL in the negative zone indicates that the investment return has been lower in the past than the risk-free rate – and thus can be an investment with negative return potential in the future too.

NOT EVERYTHING LOOKS BAD EITHER!

According to another piece of analysis done by Messari, it shows that there has been increased participation from the tech community, measured by the amount of participation and number of submissions made at their hackathon events. So while, price and other factors may be bearish, the developmental side of things could be saying something different.

Read more: Ethereum Price Prediction

CONCLUSION

Drawing conclusions from the inference above, Solana, as of current market situation and price trend, sustains in a very bearish indication for the immediate future of the token. However, it must be noted that the circumstances may change in a moment’s notice as positive inflows flood in and is backed by strong developmental support from the backend by developers on the ecosystem, building for the community. Hence it is definitely a crypto token one should keep an eye out for.

Prices as on 4 November, 2022.

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