The devastating collapse of FTX last year swept up one of the crypto industry’s hottest blockchains: Solana. Hailed for its high speeds and cheap transaction fees, the blockchain previously championed by Sam Bankman-Fried saw the price of its SOL token plummet in the wake of his FTX crypto exchange’s implosion.
But now, many digital asset investors have pegged Solana as crypto’s comeback kid after tumbling 94% in 2022. Like Bitcoin, SOL recently sky-rocketed in price, rising almost 800% since last December. Traders are also snapping up a Solana memecoin called BONK and gravitating once again toward nonfungible tokens, despite their fading hype. Transactional activity has also jumped on the Solana network as traders exploit its speed and low fees to trade risky and obscure tokens referred to in crypto slang as shitcoins.
However, in a still relatively young and often opaque industry that lacks research on bear market behavior, understanding and profiting off of Solana’s resurgence is easier said than done, according to Strahinja Savic, head of data and analytics at FRNT Financial Inc.
“There are all these risks that just aren’t presented to retail investors who are chasing the next big thing,” he said in an interview.
Savic pointed to BONK as being one of the more dubious factors in the Solana renaissance, dubbing it “a bit of a virality thing.” Created as a joke after the downfall of FTX and its sister trading firm Alameda Research, the BONK token’s full name is Bonk Inu and it follows in the tradition of other Shiba Inu dog-themed currencies like Dogecoin. Worth fractions of a cent, BONK has risen around 400% over the past month, giving it a market capitalization of $1.2 billion, according to CoinGecko. Strah noted that the token’s founders are anonymous and the motivations behind the project are unclear, adding to its highly speculative nature.
“It’s more akin to gambling and some sort of game than it is to investing,” he said.
The token’s popularity has even revived interest in the Saga crypto phone, a mobile device released in May by Solana Labs, which developed the Solana blockchain. The startup’s Solana Mobile division slashed the price of the phone to $599 just months into its launch following disappointing sales, but after a BONK airdrop, a token giveaway, was made exclusive to Saga users, the phone started selling for thousands of dollars on eBay this month.
Like the Saga phone, NFTs are beginning to bounce back as well, with monthly global sales volume climbing upward since September, according to CryptoSlam. But unlike the previous NFT craze, it isn’t the Ethereum blockchain driving sales. Both Bitcoin and Solana beat Ethereum in NFT trading volume over the past week, according to CryptoSlam.
NFT Revival
Bitcoin’s Ordinals NFTs have recently surged in popularity, while Solana has seen the rise of a new NFT marketplace called Tensor. Founded last year, Tensor has surpassed Magic Eden, once the leading NFT marketplace based on Solana, in terms of market share, capturing 57% of trading volume to Magic Eden’s 37% over the past 24 hours, according to data tracker Tiexo.
Tensor co-founder Ilja Moisejevs said in an interview that Solana’s stunning price drop following the collapse of FTX made it difficult to raise funds for his startup from venture capitalists.