Solana’s price is currently at $21.49, up 5.68% in the last 24 hours and up 10.30% in the last 7 days. The all-time high price was $259.91 on November 7, 2021 and the 52-week high was $38.77.
The short-term trend for Solana is up based on the recent price increase, while the medium-term trend is down given the significant decline from the all-time high. The long-term trend is strongly down as prices remain well below both the all-time high and 52-week high.
Near-term momentum is bullish based on a moving average convergence divergence (MACD) signal line crossover. The MACD signal line recently crossed above the MACD line, indicating strengthening upward momentum. Bullish near-term momentum is also indicated by the relative strength index (RSI) moving above 50.
The RSI is currently between 30 and 70, indicating SOL is neither overbought nor oversold at current levels. The price being above the upper Bollinger Band shows increased recent price volatility to the upside.
Solana’s Competitive Position Weakens as Ethereum Layer 2s Advance
However, Arbitrum and Optimism have surpassed Solana and other Layer 1 networks in terms of total value locked (TVL), according to Grayscale. This demonstrates the increasing adoption of Ethereum Layer 2 solutions like Arbitrum and Optimism to improve scalability and reduce fees while still benefiting from Ethereum’s security. Key Layer 2 platforms like these are accruing value to the Ethereum ecosystem. Solana has fallen behind these Layer 2s in growth and usage metrics like TVL.
🧵Following a period of strong growth, top performing Layer 2s #Arbitrum, #Optimism and #BASE are surpassing Ethereum competitor Layer 1s like Solana and Avalanche in terms of total value locked (TVL) as of 9/25.— Grayscale (@Grayscale) September 29, 2023
Here’s why that’s important. (1/6) pic.twitter.com/DpTJyLQ5Nj
Solana falling behind leading Ethereum Layer 2 platforms like Arbitrum and Optimism in growth and usage metrics is concerning for Solana’s long-term outlook for a few key reasons:
- Network effects – As more development and usage gravitates to Ethereum Layer 2s, it strengthens network effects for Ethereum as the base settlement layer. Solana risks missing out on these growing network effects.
- Questions value proposition – A key part of Solana’s value proposition was offering a faster and cheaper alternative to Ethereum. As Ethereum Layer 2s match or exceed Solana’s speed and cost, this core competitive advantage is weakened.
- Loss of developer mindshare – With development activity shifting to Optimism, Arbitrum and other Layer 2s, Solana risks losing mindshare and focus among developers. This can slow Solana’s growth.
- Reduces incentives to build on Solana – Developers may see more benefits and users on Layer 2s, reducing incentives to build dapps and DeFi on Solana relative to Ethereum Layer 2s.
- Hinders asset transfers from Ethereum – Falling behind in usage metrics can hinder assets and liquidity migrating from Ethereum to Solana, as momentum shifts the other way.
In summary, Solana’s lagging adoption and growth versus Ethereum Layer 2s threatens some of its core value propositions and competitiveness, while strengthening network effects for Ethereum. This is a concern for Solana’s differentiation and long-term outlook if the trend continues.
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