It’s an actual comeback — the return with fanfare of a cryptocurrency that many experts and industry sources gave up almost for dead after the bankruptcy of the empire of Sam Bankman-Fried on Nov. 11.
Solana (SOL), they said, was not going to find a way to survive the earthquake represented by the autumn of the FTX cryptocurrency exchange and its sister company Alameda Research, a hedge fund that also acts as a trading platform for institutional investors.
FTX and Alameda were the primary firms representing the Bankman-Fried crypto empire, known by the initials SBF, within the crypto space.
‘Sam Coin’
Solana indeed had close ties to Bankman-Fried. Dubbed ‘Sam coin,” Sol is a token issued by the Solana Blockchain, which makes it possible to develop decentralized finance or DeFi projects that supply financial services similar to loans, mortgages, financial products, etc.
The token is tied to an on-chain crypto exchange called project Serum, created by Bankman-Fried, who resigned on Nov. 11, following the bankruptcy of his empire. Serum is a liquidity hub.
Serum is considered one of the foundations of the Solana DeFi infrastructure, as it’s the protocol and ecosystem that brings high speed and low transaction cost to Solana DeFi. It implements a on-chain central limit order book and matching engine, allowing to share liquidity and to supply powerful trading features to institutional and retail investors.
Serum is asset agnostic: It provides developers with full control and suppleness to construct trading applications that leverage Serum’s liquidity and ecosystem advantages.
As if to prove the Cassandra right, Sol prices thus fell by 73% between the beginning of FTX’s difficulties on Nov. 6 to Dec. 31. They ended the 12 months at $9.96 in comparison with $32.72 on Nov. 5.
SOL Is Up 79%
But as fast as they crashed Sol prices are also rebounding very strongly. Over the past seven days, they’re up 79% in keeping with data firm CoinGecko. Sol knocks on the doors of the highest 10 cryptocurrencies when it comes to market value finally check. The token belonged to this club before its collapse.
Prices are currently trading at $23.39, which is up 134% for the reason that start of the 12 months.
Sentiment around Solana modified after an announcement of support from Vitalik Buterin, one of the influential voices within the crypto space.
“Some smart people tell me there may be an earnest smart developer community in Solana, and now that the awful opportunistic money people have been washed out, the chain has a brilliant future,” Buterin, considered one of the co-founders of Ethereum, essentially the most powerful platform within the crypto sphere, wrote on Twitter on Dec. 29.
He added that: “Hard for me to inform from outside, but I hope the community gets its fair likelihood to thrive.”
For a lot of sources within the industry, the resurgence of SOL can be on account of a growing demand for decentralized finance projects. The Solana blockchain allows developers to create decentralized applications, or dApps, at low costs and offers speed within the execution of transactions.
Its scalability, speed, and affordability make it a beautiful option for DeFi projects that must process large amounts of transactions quickly and at a low price.
“While traders are celebrating the resurgence of #Bitcoin (back over $21k) and #Ethereum (back over $1,550), #Solana is the actual star because the weekend is kicking off,” commented on-chain analytics firm Santiment. “Up +22% previously 2 hours alone, $SOL has been fueled by liquidated shorts.”
Santiment suggests that the strong rebound in Sol prices is on account of a “short squeeze,” which is a sudden surge in the worth of an asset on account of the undeniable fact that investors who bet against the asset are forced to buy it with a view to limit their losses.