Solana’s price took a hit yesterday, dropping 1% to $95.08 after the network experienced an outage for the first time in nearly a year. The 5-hour disruption led to approximately $3 million worth of long positions being liquidated, adding further momentum to Solana’s downward slide. While disconcerting, the good news is that Solana’s price has not completely collapsed.
In the broader view, Solana remains in a strong position. Over the past week, Solana is down 6% but up 10% over the past two weeks. And in the last 12 months, Solana has surged over 300%. Key indicators like the relative strength index sit at a moderate 50, meaning Solana could continue to drift lower or bounce back from here. The 30-day moving average has flattened after a period of gains, which could precede a drop but could also stabilize.
Critically, Solana needs to prevent further outages over an extended time. Solana has made technical improvements since the repeated outages of 2022. But this latest outage is a warning sign that vulnerabilities may still exist. If Solana can keep running smoothly over the next few months, faith in the network is likely to be restored along with the price.
However, if Solana stumbles again soon with another outage, it could be devastating for market confidence. Investors were hopeful Solana’s technical woes were firmly in the past. Another disruption so quickly would signal the improvements may be inadequate and lead to plummeting prices.
In the short term, Solana may recover back to $100. But the medium and long-term outlook depends entirely on Solana’s ability to avoid additional outages. While one outage thus far in 2024 is acceptable, Solana’s resilience is now being tested. Further outages could break faith in the network completely and erase Solana’s substantial gains over the past year.
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