During the second half of March this year, Solana managed to surpass the price of $200 after having achieved a triple-digit increase (more than 500%) in the previous 12 months.
Immediately after, it experienced a significant drop that saw the token hit almost $120 and more recently, in a recovery move, we saw it surpass $150.
Despite this severe fluctuation, it is still a cryptocurrency that has shown an increase of more than 50% this year, considering the data up to 04/22/2024.
Recently, with the completion of the Bitcoin halving moving the cryptocurrency market, the question arises: could this event lead Solana to surpass its all-time high?
What is Solana's current ATH?
The highest price Solana reached was $260 on November 5, 2021.
Since then, the only time there was any approach to this historical maximum was precisely at the moment described at the beginning of this article, and the maximum price was $209.90.
During the enormous gap recorded between the all-time high and the recent moment of exceeding $200, the great crypto winter that the market went through ended up significantly reducing the price: between May 2022 and November 2023, Solana remained below the $50 (with a lot of the time under $25).
Solana: the improvement of Bitcoin improvement
From the moment we witnessed the halving of Bitcoin, a big change began to occur in the token that, despite being widely known, does not provoke the necessary reflections: the remuneration for mining said cryptocurrency was reduced by half and That makes a big difference.
For Bitcoin itself, the difference lies in what can happen with the price: the disincentive to mining tends to make this activity more restricted from the supply side and, when looking at demand, an increase is expected due to to the entry of spot ETFs in American retail - this without mentioning the Asian demand from the authorization of these ETFs in Hong Kong.
However, looking at the crypto market in general, this event has the potential to drive advancements in several projects, especially those with the potential to offer structural improvements to what is found in Bitcoin itself. Two of these projects are Ethereum and Solana, precisely because they are the two largest blockchain networks that present real potential for the alternative.
Solana ends up gaining the leadership in growth potential over Ethereum because it is a network with greater versatility, greater capacity for transactions per second and, as it is a network that emerged precisely to optimize certain aspects of Ethereum (remember: it is known as the Ethereum killer!), developers and those responsible for resolving network failures get an even greater incentive to correct them and allow reliability to translate into more projects and, consequently, an increase in the price.
The psychological effect must be taken into account
There is another factor, which is more psychological than technical: even the crypto market allows you to buy fractions of cryptocurrencies, people tend to believe that, with lower prices, the room for increases is greater.
It is similar to what happens with stock splits. Suppose a company has one million shares at $100 per share. If you wanted to split these shares 5:1, you would go on to offer five million shares at $20 per share. In practical terms, the total value of the available shares remains the same, but having a lower price tends to psychologically encourage purchases because people see in this a potential for further increases so that at least the price reaches the previous value.
The analogy with stock splits is valid not because the price has experienced this, but when comparing the price of Ethereum (which is above $3000) and what is observed in Solana (as already mentioned, a little more $150).
Still from the psychological aspect, it must be considered that percentage increases tend to stabilize after strong increases, but this is more common in higher prices. Someone is more likely to agree with the statement "this quote can't go any higher" about something in thousands of dollars than about something in hundreds of dollars.
Again: A psychological effect, but one that should not be disregarded.
Taking all these factors into account, we can expect Solana to surpass its all-time high in this next cycle that includes the recent halving period and the next one (expected for 2028). Do you agree with this thesis?
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