Key Insights:
- Solana price has jumped over 20% and has reached $200 amid growing institutional interest.
- Analysts are raising issues about Solana’s future and are comparing SOL’s structural weakness to the collapse of LUNA in 2022.
- The ongoing network upgrade aims to boost block size by 20% and improve throughput. However, it raises reliability questions.
Solana is back in the spotlight, after gaining over 20% in the past week and trading above the $200 mark. This bullish trend comes amid fresh investor optimism and an incoming network upgrade.
So far, Solana’s ongoing spike shows that a turning point is incoming. Analysts split on whether this marks a breakout or the beginning of another volatile cycle.
Solana Price Rises Over 20% Amid Warning Signs
Solana has risen strongly over the last seven days, outperforming top assets like Bitcoin and Ethereum. At press time, the token is trading around $201, having reached as high as $202.52.
Analysts are now pointing to a 34% jump this July alone. This indicated that strong capital inflows and investor interest are the new norms. However, under the excitement, some experts warn that storm clouds are forming.
Technical analyst Gert van Lagen recently raised serious issues about Solana’s long-term strength. SOL is underperforming compared to other major cryptocurrencies like BTC, ETH, ADA, and XRP. The post likens this slump to Terra’s LUNA crash in 2022, hinting at growing concern in the market.
He pointed out that Solana is bleeding against all major trading pairs. Also, its structure shows a bearish divergence across multiple charts. “Wouldn’t be shocked if $SOL ends up being this cycle’s $LUNA. It’s already looking so lunar,” said van Lagen on X.
In his view, this weakness could cause investors to rotate out of SOL and into stronger competitors. He argued that if an asset underperforms across major pairs, “it’ll be swapped.”
Solana’s ETF Speculation Fuels Institutional Appetite
Despite these red flags, bullish sentiment is still strong in other circles. Analysts believe that Solana is in the middle of a major shakeup.
SOL’s move above $200 indicates it is changing from a “meme-driven network” into a blue-chip, institutional-grade asset. Analyst Christiann, for example, pointed out that Solana could be headed towards levels as high as $400 – $450.
The long-term outlook for SOL appears promising due to over $73 million in pre-ETF capital inflow. Additionally, nearly 3 million SOL were transferred into corporate wallets last month, signaling institutional interest.
This shows that institutional investors are positioning early. If ETF approval goes through, Solana could lead the next rotation into altcoins.
Major Upgrade, Block Size Increased by 20%
Another fuel source to the bullish case is Solana’s Epoch 821 upgrade, which is now underway. This upgrade increases the block size by 20%, and is aimed at pushing the network’s capacity past 60,000 transactions per second (TPS).
This improvement is powered by Solana’s proof-of-stake (PoS) design and its QUIC networking protocol. According to Helius Labs CEO Mert Mumtaz, the larger blocks could massively improve throughput and reduce network congestion.
“In 8 hours, Solana blocks become 20% bigger,” Mumtaz posted on X. If implemented successfully, Solana’s technical upgrade could position it as a formidable competitor to Ethereum. This is especially timely as Ethereum navigates its next phase following the Pectra update.
Reliability Still an Issue
Despite it all, Solana’s network reliability is still under scrutiny. In the past, network outages during periods of high activity have dented user trust.
Some traders remain cautious about Solana’s upgrade, raising concerns about its impact. They worry that the increased block sizes might lead to new performance issues.
These reliability issues must be addressed if Solana wants to maintain its newfound institutional interest. In summary, Solana is at an important milestone. On one hand, institutional interest, ETF speculation, and protocol upgrades are offering it bullish momentum.
On the other hand, its structural weakness, underperformance against major coins, and network reliability are real sources of risk. If ETF rumors are accurate, SOL might gain major momentum in the crypto space.
Strong fundamentals allow it to spearhead the next surge of altcoin investments. However, if current cracks in the foundation widen, Solana may struggle to maintain its position in the future.
