Solana to make a comeback after $25 million worth of SOL positions liquidated
- Analysts on crypto Twitter buying the dip, expect SOL price to resume upward climb after dropping to $130.
- Solana price has failed to recover from the drop triggered by a network outage on September 15.
- One server in Amazon's data center accounts for 37.45% of Solana, essentially making it a "kill-switch" for future outages.
SOL consolidation continues, and analysts are convinced that the altcoin still has upside potential.
SOL fails to recover outage-triggered drop, recovery expected
Solana's on-chain activity has exploded over the past four months and the altcoin posted over 118% gains over the past 30 days. Since a network-wide outage on September 15, the altcoin price has failed to recover, though.
1/ Solana Mainnet Beta encountered a large increase in transaction load which peaked at 400,000 TPS. These transactions flooded the transaction processing queue, and lack of prioritization of network-critical messaging caused the network to start forking.
— Solana Status (@SolanaStatus) September 14, 2021
Proponents conclude that one of the key triggers in SOL's consolidation is the outage that lasted over 15 hours. Traders in the crypto community were initially drawn to the Solana network for its low-cost transactions and faster processing times; however, the downtime highlighted the need for better network infrastructure and further decentralization.
Mira Christanto, a Senior research analyst at Messari, a crypto research and data platform, informed users that if 33% of Solana's network suffers an outage, the blockchain protocol will not validate transactions.
Furthermore, this is a cause of concern for traders that emphasize on "decentralization", since 45% of Solana's validators are hosted in just two data centers.
If 33% of $SOL's network goes down, @solana can't confirm transactions. This data center hosts 15% of Solana's active network stake. 2 datacenters account for 45% of validators.
— Mira Christanto (@asiahodl) February 28, 2021
Alerted last week: https://t.co/aVR2bi3bBx pic.twitter.com/GZjLdaMRqa
Interestingly, a single server in an Amazon data center (Amazon-02) holds enough stake in the Solana network to act as a "kill switch." Amazon-02 accounts for 37.45% of Solana that is currently staked.
Despite the ongoing consolidation, @AltcoinSherpa, cryptocurrency analyst and trader, has decided to buy SOL once it hits $130. At the time of writing, SOL is trading at $140.54.
$SOL: I think buying from here to $130 is a decent play. I'll buy a little bit here I think. #Solana pic.twitter.com/NQS7mNgeIs
— Altcoin Sherpa (@AltcoinSherpa) September 17, 2021
@Pentosh1, leading pseudonymous analyst and trader on crypto Twitter, observed that traders who tried catching the knife suffered losses. The analyst is surprised by the rebound in SOL price after capitulation.
Please help! Does anyone know why the price of $SOL is bouncing so hard off support after capitulation? It's up almost 10% off the lows! SEND HELP!!!!! https://t.co/HpqxejvcuV
— Pent◎shi Wont DM You (@Pentosh1) September 17, 2021
FXStreet analysts expect the altcoin to rally to $276.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
