The Solana price has struggled in the past few weeks. According to CoinMarketCap, the SOL price has dropped by more than 20% in the past 7 days. This means that it has lagged Bitcoin and Ethereum that have declined by about 7% and 13%. Its total market capitalization has dropped to more than $47 billion.
SOL price pressured
Solana is one of the biggest Ethereum-killers in the world. The well-funded blockchain project helps developers build decentralized applications like stablecoins, non-fungible tokens (NFTs), and Decentralized Finance (DeFi) projects.
Solana helps to solve some of the biggest challenges that Ethereum has. For example, Solana is a relatively faster platform that can process more than 2,000 transactions per second. Ethereum can only process less than 30 transactions.
Solana is also relatively cheaper than Ethereum. Transactions in the network cost less than $0.001 while those in Ethereum cost more than $20.
Most importantly, Solana is a proof-of-stake (PoS) while Ethereum is a proof-of-work (PoW) platform. This makes it a more environmentally-friendly platform.
As a result, there are more developers in the platform. For example, there are about 40 DeFi platforms in Solana that have a total value locked of more than $10.85 billion. This makes it the 5th biggest DeFi platform after Ethereum, Binance Smart Chain, Avalanche, and Terra.
While Solana is a good project, it has faced a number of challenges recently. The biggest challenge was a two-day outage a few months ago. This outage affected all DeFi and other app projects in the network.
And recently, the network went through significant congestion after launch of SolChicks on the Raydium network. SolChicks, an NFT platform, launched CHICKS token on Raydium and MEXC exchange. This demand led to significant congestion and lower transactions. As such, there is a likelihood that more developers will switch to other platforms.
Solana price prediction
The four-hour chart shows that the SOL price has been in a major bearish trend in the past few weeks. The sell-off accelerated when the price declined below the key support level at $185, which was the lowest level in November 18th. It also moved below the 25-day and 50-day exponential moving averages (EMA).
The Relative Strength Index (RSI) is hovering near the oversold level of 30. Therefore, the coin will likely keep falling as bears target the key support level at around $140. The distance between the highest point this month and the support at $185 is the same as the distance between $185 and $140.
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