There is nothing new in the crashing crypto market, but still, there are always projects and platforms that are more interesting than others. Solana is definitely the case. That’s because it’s one of the fastest blockchains in the industry. The current Ethereum proof-of-work model is low scalable, it can only process 15 TPS. On the contrary, Solana is thousands of times faster than Ethereum. The issue is that Solana’s price has fallen for approximately 6 months, and that’s interesting to find out possible reasons for such a significant drawback. Here’s what we think about the following topic.
3 Main Reasons for Solana's Price Drop
First, the situation with the growing index of the USA retail prices and increase of the FRS rate could be a reason.
At the end of the last week, there was a new announcement of the USA inflation +8.6%, a record-breaking index since 1981. The FRS forcibly increased the rate and cut liquidity. The US stock market officially entered the downtrend. The following circumstances indicate severe pressure upon the crypto market.
Then, the Solana network experienced about 9 failures in less than a year.
The failure occurred from 30 April to 1 May, when the network was ‘frozen.’ The problem appeared because numerous incoming transactions and excessive traffic overloaded the network and caused the complete letup. According to the developers, a massive amount of transactions resulted from refusal from the Dutch Auction system when minting NFTs. Thus, NFT buyers tried to maximize their chances of sending a massive number of requests. Consequently, the validators lacked memory, and the collapse happened. Because of the issue, Solana lost 11.3%.
Next, on 1 June, Solana wasn't generating new blocks for 4 hours because of the failure in 'long-term unremarked transactions' processing that led to blockchain consensus damage. The developers switched the operation off and asked the validators to relaunch the blockchain. As a result of the failure, Solana lost 12%.
Those drawbacks give us a negative image and explain the price increase. It doesn't mean Solana will disappear or meet the bottom, though. There is a recovery from the last two weeks' bloodbath, so the crypto market is mixed.
The story repeats itself, and dramatic failures and vigorous comebacks have already occurred. Will Solana survive the current crisis? It's already gained an extraordinary 28.7% in the past week, and some prominent crypto people, such as Rick Rieder, the CIO of BlackRock, believe that nowadays, underdogs will definitely gain success soon.