Solana (SOL) is one of the best performing cryptocurrencies in 2023, and is in stark contrast to Ethereum (ETH).
While SOL has risen by more than 1,000%, ETH has only risen by 90%. This raises the question: Can Solana flip Ethereum next year?
What's behind Solana's surge?
Speaking to BeInCrypto, Julian Deshler, co-founder of ElusivDiscuss some of the reasons Solana prices are so high this year.
Elusiv is a global encryption layer For Web3, enabling a decentralized world. It launched on Solana Mainnet in March 2023 following a successful $3.5 million seed round in November.
Mr. Deshler believes the reason for SOL's superior performance 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 has gained prominence this year with major projects launching tokens via Airdrops (BONK). This has attracted people into the ecosystem and increased liquidity significantly.
He notes that despite initial skepticism after FTX's collapse, Solana persevered. Its cost-effectiveness played a crucial role in doing so.
Read More: How to Buy Solana (SOL)
Deschler points out that Solana's growth is not a short-term trend. SOL is a massive competitor to Ethereum, and the growing hype is expected to attract more builders and liquidity to the ecosystem.
Many projects on Solana without tokens provide the additional possibility of increasing liquidity. Upcoming global hackathons are also likely to enhance visibility next year.
However, the potential for ETH-based EVM projects to migrate to Solana is challenging due to their existing Solana counterparts acting as direct competitors.
In conclusion, Deschler stated that Elusiv has seen significant benefits from SOL's price increase, reaching all-time highs in daily and weekly volume and increasing usage and engagement on platforms like Discord and Twitter.
Read more: What is Solana (SOL)?
SOL Price Prediction: Can It Upend Ethereum?
Technical analysis of the weekly time frame of SOL/ETH shows that despite the breakout from the long-term bearish resistance trend line at the beginning of the year, the price of SOL did not accelerate its rise until June (green symbol).
Instead, Ethereum outperformed Solana during the first half of the year, and the trend reversed in the second half. The price is approaching an all-time high of 0.055 ETH. However, the rise has become quite parabolic.
Technical analysts use Elliott Wave theory to identify long-term recurring price patterns and investor psychology, which helps them determine the direction of the trend.
The most likely wave count indicates that SOL is approaching the top of the five-wave (black) upward movement that began in June. The fifth wave is extended and has approximately the same length as the first and third waves combined. This is a sign of a possible summit.
Therefore, SOL may peak near 0.052 ETH and then correct. In this case, the price may fall by 35% to the nearest support at 0.032 ETH.
Despite this bearish prediction for SOL price, a close above the all-time high at 0.055 ETH would extend the rally. This could lead to a 45% rally to the next resistance level at 0.072 ETH.
However, this would not be enough to overturn Ethereum's market capitalization, which at $274 billion is five times larger than Solana's.
For the latest cryptocurrency market analysis from BeInCrypto, click here
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