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Solana (SOL) has been one of the best-performing cryptocurrencies in 2023, starkly contrasting Ethereum (ETH).
While SOL has increased by more than 1,000%, ETH has only moved upward by 90%. This raises the question: Can Solana flip Ethereum next year?
What’s Behind the Solana Increase?
Speaking to BeInCrypto, Julian Deschler, the Co-founder of Elusiv, discussed some of the reasons for the Solana price increase this year.
Elusiv is a universal encryption layer for Web3, empowering the decentralized world. Its launch on the Solana Mainnet in March 2023 followed a successful $3.5 million seed round in November.
Mr. Deschler believes the reason for SOL’s outperformance compared to ETH lies in its technological capabilities—fast and cost-effective transactions, eliminating the need for high gas fees in swaps or DeFi interactions.
Also, SOL gained prominence this year through major projects launching tokens via airdrops (BONK). This drew people into the ecosystem and significantly increased liquidity.
He suggests that despite initial skepticism after the FTX collapse, Solana persevered. Its cost-effectiveness played a crucial role in doing so.
Deschler suggests that Solana’s growth is not a short-term trend. SOL is a formidable competitor to Ethereum, and the growing hype is expected to attract more builders and liquidity to the ecosystem.
Numerous projects on Solana without tokens offer further potential for increased liquidity. Also, upcoming global hackathons will likely enhance visibility in the coming year.
However, the possibility of ETH-based EVM projects transitioning to Solana is challenging due to existing counterparts on Solana that serve as direct competitors.
To conclude, Deschler stated that Elusiv has experienced significant benefits from the SOL price increase, reaching all-time highs in daily and weekly volume and increased usage and engagement on platforms like Discord and Twitter.
SOL Price Prediction: Can it Flip Ethereum?
The weekly time frame technical analysis for SOL/ETH shows that despite a breakout from a long-term descending resistance trend line at the start of the year, the SOL price did not accelerate its increase until June (green icon).
Rather, Ethereum outperformed Solana through the year’s first half, and the trend reversed in the second one. The price is approaching its all-time high region of 0.055 ETH. However, the rally has become completely parabolic.
Technical analysts employ the Elliott Wave theory to identify recurring long-term price patterns and investor psychology, which helps them determine the direction of a trend.
The most likely wave count suggests that SOL is nearing the top of a five-wave upward movement (black) that began in June. Wave five has extended and has nearly the same length as waves one and three combined. This is a sign of a potential top.
So, SOL may reach a top near 0.052 ETH and then correct. In that case, the price could fall 35% to the closest support at 0.032 ETH.
Despite this bearish SOL price prediction, a close above the all-time high region of 0.055 ETH will extend the rally. This could lead to a 45% increase to the next resistance at 0.072 ETH.
However, this will not be sufficient to flip the market capitalization of Ethereum, which at $274 billion is still more than five times larger than Solana.
For BeInCrypto’s latest crypto market analysis, click here