Solana (SOL) made headlines in 2021 with a meteoric rise, surging to nearly $260 and delivering an astonishing 1,120% annual gain. However, the momentum reversed sharply in 2022, as the token lost 94% of its value amid the broader crypto market downturn. While that year was painful for investors, the steep correction may actually strengthen the case for Solana as a compelling investment opportunity in 2023.
Despite the price collapse, Solana’s underlying technology and ecosystem have remained robust. The network continues to attract developers and users, showing strong organic growth in key areas like decentralized finance (DeFi) and non-fungible tokens (NFTs). As of early 2023, Solana has rebounded with a year-to-date gain of over 137%, significantly outperforming major cryptocurrencies like Bitcoin (+39%), Ethereum (+37%), and BNB (+34%).
This article explores why Solana could be a smart investment in 2023, examines its key challenges, and analyzes current technical indicators to assess its potential price trajectory in the coming months.
Why Solana Is Considered a Strong Investment
After a turbulent 2022—marked by the collapse of FTX, a major backer of Solana—the network has shown resilience. While investor sentiment was shaken when SOL dropped to around $10 in November, the broader market now recognizes that Solana’s survival doesn’t depend on any single entity.
Several fundamental factors suggest that Solana remains a promising long-term investment:
📈 Growing Transaction Volume
One of the most reliable indicators of blockchain health is active user engagement. In this regard, Solana has demonstrated impressive recovery.
Following a post-FTX dip in November, daily non-voting transactions (Txs) bottomed out at 22.6 million in early December. By January, they had rebounded to 46.7 million—a near doubling in just one month. Although transaction volume has since stabilized below 40 million, the trend remains positive and signals sustained network usage.
🚀 Rising DeFi Daily Active Users
Closely tied to transaction growth is the increasing number of users interacting with decentralized applications (dApps) on Solana.
In late December, daily active users in Solana’s DeFi ecosystem hovered below 20,000. By early January, this figure surged past 50,000 and has since held above 40,000. The primary driver? Increased activity on Raydium (RAY), an automated market maker (AMM) and liquidity provider built on Solana for the Serum decentralized exchange (DEX).
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This growing user base reflects renewed confidence in Solana’s DeFi infrastructure—though not all metrics tell a positive story, as we’ll discuss later.
🖼️ Second-Most Popular NFT Network
Solana ranks as the second-most active blockchain for NFT trading, trailing only Ethereum. Its combination of blazing-fast transaction speeds (around 5 seconds) and ultra-low fees (averaging less than $0.001) makes it ideal for NFT creators and collectors.
According to CryptoSlam, approximately $141 million worth of NFTs were traded on Solana over the past 30 days. Both total sales volume and the number of unique buyers grew by about 30% during this period—clear signs of reinvigorated market interest.
However, it's important to note that NFT trading volume on Solana remains over 90% below its peak. The speculative frenzy of 2021–2022 has cooled, and it’s unlikely we’ll see million-dollar NFTs return anytime soon.
💡 Trading Far Below All-Time High
At the time of writing, Solana trades at around $23—over 90% below its all-time high of $260. While some view this as a red flag, others see it as a prime buying opportunity.
With a current market cap of roughly $8.5 billion—down from over $78 billion in 2021—Solana appears significantly undervalued relative to its previous peak. This wide valuation gap suggests substantial upside potential if the network regains investor confidence and expands its ecosystem.
Of course, past performance doesn’t guarantee future results—but the combination of low price, strong fundamentals, and improving metrics paints an optimistic picture.
Challenges Facing Solana as an Investment
Despite its strengths, Solana is not without risks. Investors should carefully consider the following drawbacks before allocating capital.
🔗 Close Ties to FTX
Solana’s relationship with the now-defunct FTX exchange is one of its biggest vulnerabilities. Alameda Research, FTX’s trading arm, was an early investor in Solana’s ICO and held billions of dollars’ worth of SOL tokens.
Sam Bankman-Fried, former CEO of FTX, was also a vocal advocate for Solana, frequently promoting it as Ethereum’s top Layer-1 competitor. With FTX gone, questions remain about how the liquidation of its SOL holdings might impact market supply and pricing.
👉 See how blockchain networks recover from major exchange collapses.
While the network itself is independent, the overhang of FTX-related sell pressure could weigh on SOL’s price in the short to medium term.
📉 Sharp Decline in Total Value Locked (TVL)
While daily active users in DeFi are rising, another key metric—Total Value Locked (TVL)—tells a different story.
Solana’s TVL plummeted from over $10 billion at the end of 2021 to just $260 million in February 2023. Even more concerning: the decline isn’t solely due to falling prices. The actual amount of SOL locked in DeFi protocols dropped from 68.2 million tokens to just 11.5 million.
This erosion of liquidity could threaten Solana’s position among leading DeFi chains. Currently ranked #12 globally, it sits between DeFiChain ($304M TVL) and Osmosis ($206M TVL). In contrast, Ethereum dominates with $29.1 billion in TVL, followed by TRON at $5.1 billion.
⚠️ High Centralization and Frequent Outages
Critics often highlight Solana’s high degree of centralization as a structural weakness. While this design enables fast and cheap transactions, it compromises network reliability.
For context:
- Ethereum operates with over 12,800 full-node validators.
- Solana runs on just 2,340 validators on mainnet.
- Some chains like BNB Smart Chain rely on only 21 validators.
Fewer validators mean faster consensus but increased risk of coordination failures. Indeed, Solana suffered five major outages and nine partial disruptions in 2022 alone—raising concerns about its ability to scale reliably during periods of high demand.
Solana Price Prediction: Bull Run Ahead?
According to technical analysis from CoinCodex, Solana entered 2023 in a bearish posture. As of early February, there were 7 bullish signals versus 23 bearish signals across various indicators.
SOL was trading below both its 50-day and 200-day simple moving averages (SMAs)—a classic sign of downtrend momentum.
However, forecasts suggest a potential reversal in early 2024. The algorithm predicts that Solana could surpass its previous all-time high of $260 and reach a new peak of **$536**—implying more than a 20x return from early 2023 levels.
Note: Price predictions are speculative and subject to change based on macroeconomic conditions, regulatory shifts, and ecosystem developments.
Frequently Asked Questions (FAQ)
Is Solana a good long-term investment?
Solana shows strong long-term potential due to its high-speed architecture, growing NFT and DeFi ecosystems, and significant undervaluation compared to its peak. However, risks like centralization and FTX-related sell pressure remain.
Can Solana reach $100 again?
Yes—many analysts believe Solana can reclaim $100 if market conditions improve and developer activity continues to grow. Reaching new highs would depend on broader crypto adoption and network stability.
Why did Solana crash in 2022?
The crash was driven by a combination of factors: the general crypto bear market, FTX’s collapse (a major SOL holder), declining DeFi TVL, and repeated network outages that eroded user trust.
How does Solana compare to Ethereum?
Solana offers faster transactions and lower fees than Ethereum but lags behind in decentralization and security. It serves as a scalable alternative for apps prioritizing speed and cost-efficiency.
What are the biggest risks of investing in SOL?
Key risks include centralization concerns, dependency on a limited number of validators, historical network instability, and potential sell-offs from bankrupt entities like FTX.
Should I buy Solana now?
If you’re comfortable with moderate-to-high risk and believe in Solana’s technological promise, now may be an attractive entry point given its low valuation. Always do your own research and diversify your portfolio.
Final Verdict: Is Solana Worth Buying in 2023?
Solana stands at a pivotal moment. On one hand, it faces lingering challenges from the FTX fallout and declining DeFi liquidity. On the other, it’s demonstrating strong organic recovery through rising transaction volume, active DeFi users, and NFT market revival.
The network’s core advantages—speed, low cost, and developer momentum—remain intact. Combined with its current undervaluation, these factors make Solana a compelling candidate for inclusion in a diversified crypto portfolio.
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Ultimately, whether Solana is worth buying depends on your risk tolerance and belief in its long-term vision. For investors seeking asymmetric upside in a post-bear market cycle, Solana may offer one of the most attractive opportunities in 2023.
Core Keywords: Solana investment, SOL price prediction, blockchain technology, DeFi growth, NFT trading, Layer-1 blockchain, cryptocurrency analysis