Solana retraces gains as analysts say multi-week rally is a price correction

Quick Take

  • Solana outperformed all other blue chips in a 27% rally this week, however, the altcoin has fallen by over 7% in the past 24 hours. 

  • Some analysts suggest Solana’s impressive market movement is only a price recovery, after being undervalued for a long period.

Solana SOL -3.24% has been outperforming all other blue-chip cryptocurrencies, with a 50% gain in October and rising over 250% year-to-date, according to CoinGecko data. Some analysts think the altcoin's rally is a price correction from a long period of undervaluation.

CoinShares Research Analyst Max Shannon told The Block that solana is hitching a ride on bitcoin's move higher, and that "it's rally is primarily hype driven." YouHodler Chief of Markets Ruslan Lienkha said "the recent surge looks more like a price recovery as the token was undervalued for a long period."

"Solana experienced a dramatic drop in value after FTX blew up and the token missed an upward trend in the crypto market from the beginning of this year," Lienkha told The Block.

Solana has fallen by over 7% in the past 24 hours, changing hands for $39,41 at 1:30 p.m. ET, according to CoinGecko.

Solana's strong developer fundamentals


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Ryze Labs Founding and Managing Partner Matthew Graham pointed to strong developer fundamentals behind the layer 1.

"From day one, Solana set out on a mission to gain mindshare among builders who would launch unique platforms and products. Price action reflects the work put in, from engineering to community development, that has made Solana a vibrant ecosystem full of useful products, " Graham told The Block. The Ryze Labs managing partner added that he "does not see Solana's momentum slowing down."

CoinShares' Max Shannon still sees Solana's metrics as muted, "with flat growth from transactions, TVL, fees, revenues and developer counts in the year-to-date."

"Savvy investors may be banking on the quiet developments and implementation of isolated fee markets, the introduction of Jito-Solana to combat spam transactions, and the development of Firedancer as an independent validator client enhancing its stability, performance, and scalability as a network. Otherwise, we suspect the 94% decline from peak to trough made it an attractive proposition regardless," Shannon added.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].


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