Solana's (SOL 1.38%) cryptocurrency saw significant sell-offs on Tuesday due to a network outage, but it's bouncing back in Wednesday's trading. The price per SOL token was up roughly 6% on the day as of 5:45 p.m. EDT.
The Solana blockchain network went offline on Tuesday due to high transaction volume, but the team was able to get things fixed relatively quickly, and the price of its crypto token subsequently recovered. It also looks like investors are shrugging off some potential tax and regulatory changes that could impact the broader crypto space.
Top cryptocurrencies came under pricing pressure at the beginning of the week as Democrats in the House of Representatives put forward tax changes that would have the IRS treat crypto tokens as securities rather than property. This would mean that cryptocurrencies would be subject to wash-sale rules, closing a loophole that's allowed traders to engage in short-term transactions while still treating sales made at a loss as tax-deductible events.
This was followed by comments from SEC chair Gary Gensler at a Senate hearing on Tuesday, indicating that stablecoins and crypto lending and staking services could soon fall under the regulatory-body's purview.
Coming on the heels of new regulatory concerns, Tuesday's network outage added another significant negative catalyst, and SOL's price per token fell approximately 7% on the day. However, the development team got the network back online after roughly 17 hours, and investors appear to view the current batch of potential tax and regulatory changes as having a relatively minor impact on the crypto space.
Solana's blockchain network has been seeing fast-growing adoption for projects, including the development of non-fungible tokens (NFTs) and decentralized finance initiatives including trading platforms. Incredible pricing growth for the SOL token has made it the seventh-largest crypto currency by market capitalization, and it now has a market cap of roughly $46.7 billion.
Continued adoption for Solana could help drive the token higher, but investors should also take SOL's incredible recent run into account and understand that it's definitely a high-risk play, even if there may still be big upside on the table.