Behind the Strength of SOL: In-Depth Analysis and Future Prospects

In the cryptocurrency market, SOL has recently performed strongly, attracting widespread attention. This article will analyze the rise of SOL from several unique perspectives and explore its future trends.

Fall out of faith, rise out of consensus

Comparing the historical performance of SOL and Ethereum ( ETH ), we can find some interesting similarities. ETH performed excellently in the last bull market, rising nearly 60 times from the low point in 2018. However, before that, ETH fell from its 2017 high of $1440 to $81.79, a drop of 94%. Similarly, SOL fell from $259.9 to $8, a drop of up to 97%.

This extreme market volatility often washes away most speculators, leaving steadfast holders. As prices recover and the ecosystem develops, new buying interest begins to enter the market, driving prices up. In this process, two types of investors are particularly important: first, those who already have positions and continue to add to them, and second, new investors who buy at support levels or during an upward trend.

The Key Role of Asset Creation

The success of a public blockchain depends not only on its technical advantages or the completeness of its ecosystem, but more importantly on its ability to create profit effects and new narratives. In the SOL ecosystem, the explosive success of BONK and the introduction of the Depin concept are both good examples. These emerging assets and concepts not only attract new users but also create new value locking mechanisms.

In contrast, ETH may need to wait for the next significant event (, such as a substantial reduction in Gas fees or the approval of an ETF ), to trigger a new round of growth due to its high Gas fees and a relatively stable holder structure. However, given ETH's large base of believers, once a key event is triggered, its explosive potential will also be considerable.

The Importance of Chip Structure

Contrary to popular belief, a highly concentrated chip structure may actually be more favorable for price increases. This is because the main factor determining price movements is potential buying pressure, rather than the distribution of existing holders. A stable holding base combined with continuous buying pressure often leads to a strong upward trend.

Taking ETH as an example, in the last bull market, the staking lock-up of ETH 2.0, large purchases by certain investment funds, and the lock-up in DeFi greatly reduced the circulating supply in the market, creating a growth potential of up to 60 times for ETH.

SOL is currently facing a similar situation. Certain entities hold approximately 55.8 million SOL, accounting for 13% of the total circulation. This chip structure is reminiscent of what ETH once experienced. However, once this portion of SOL returns to circulation, the market may face new pressure, which is similar to the situation ETH experienced after the Shanghai upgrade.

Future Outlook

In summary, the strong performance of SOL is supported by multiple factors. However, investors still need to be cautious and closely monitor market changes. In particular, the handling of large positions may have a significant impact on the future trend of SOL.

In the cryptocurrency market, cyclical and sudden events often have a huge impact. Investors should remain vigilant, manage risks well, and also closely monitor potential triggering factors that may lead to the next bull market.