At a time when Solana (SOL 0.34%) is trading nearly 90% below its all-time high, investors are getting increasingly concerned about the long-term outlook for this former high-flying cryptocurrency. Despite an impressive list of new product announcements -- including Solana Pay and Solana Mobile earlier this year -- not much has helped to boost the price of Solana in recent months.
It's also getting harder for Solana investors to ignore concerns about network outages and disruptions. In fact, according to the latest social media sentiment survey, Solana posted its most negative sentiment in months. Is it time to give up on this crypto, or will the sun eventually come out for Solana?
Network outages
Network disruptions, of course, are no fun for anyone. In a world in which we've grown accustomed to to 24/7 connectivity, the loss of connection, even for a few minutes, can be cause for frustration. Just think of what happens if the internet goes down, if a website won't load, or if your cellphone network keeps dropping calls. It's the same thing with blockchain networks, and Solana has had multiple outages this year. One in January lasted 18 hours, and that was followed up by shorter outages in June and again earlier this month. Solana, as might be expected, claims these outages are just due to human error and software bugs and not to malicious, third-party attacks.
Image source: Getty Images.
Solana is not the only blockchain experiencing downtime issues occasionally. Go to social media these days, and it's not hard to find people questioning all the glitches, setbacks, scandals, and hacks happening to other blockchains. The same people souring on Solana are the same people who constantly question the network congestion and high fees on Ethereum (ETH -0.66%) and the same people who delight in highlighting the hacks and exploits taking place on blockchains like Binance (BNB 1.49%). There also are instances of rival blockchains taking snipes and potshots at each other, all in the interest of appearing more trustworthy to their own users.
The good news, if you want to call it that, is that Solana co-founder Anatoly Yakovenko says his team has figured out what's going on with the network and is making the prevention of future outages the "number one priority." With that in mind, Solana is working on a new solution from Jump Crypto that it believes will solve the problem.
Solana's competitive position
Solana is not just playing defense. The crypto has been making major moves on offense, especially within the market for non-fungible tokens (NFTs). Solana now controls nearly a quarter of the NFT market and has seen enormous recent success for Magic Eden, the most popular Solana NFT marketplace, as well as with the launch of new, high-profile NFT collections. In large part, Solana's market share gains are due to the speed and low costs of the Solana network.
Simply stated, it's cheaper, easier, and faster to mint and trade NFTs on Solana than on rival blockchain networks such as Ethereum. Moreover, if you look at how Solana is faring versus other blockchains in terms of overall performance, it's clear that Solana stands out for its speed, scalability, and transaction processing. Solana also plans to roll out its first-ever Layer 2 scaling solution, which will improve performance even more.
Will sentiment flip for Solana?
Ultimately, sentiment about any crypto is going to fluctuate wildly over time. Santiment, the blockchain analytics firm that conducts the social media sentiment survey, for example, says that the fear, uncertainty, and doubt (FUD) surrounding Solana seems to have worked up to a fever pitch. It also notes that "heavy bearish sentiment" is often a strong signal for a near-term upswing. While I'm concerned about outages taking place on the Solana network, they seem to be the classic growing pains of a young blockchain network.
Moreover, I remain impressed by all the innovation happening on Solana these days. Heading into 2023, for example, Solana is getting ready for the official launch of the world's first-ever crypto phone. Better days are ahead for Solana, and I remain bullish on the crypto's long-term outlook. Getting the chance to buy a crypto with enormous long-term growth prospects at a 90% markdown is what I call a true bargain.
