Solana (SOL) has been one of the best-performing cryptocurrencies in 2023 and stands in stark contrast to Ethereum (ETH).
While SOL is up more than 1,000%, ETH is up only 90%. This begs the question: Can Solana flip Ethereum next year?
What’s behind the Solana surge?
Speaking to BeInCrypto, Elusiv co-founder Julian Deschler discussed some of the reasons for the Solana price increase this year.
Elusiv is a universal encryption layer for Web3 that strengthens the decentralized world. The launch on Solana mainnet in March 2023 was followed by a successful seed round worth $3.5 million in November.
Mr. Deschler believes that the reason for SOL’s outperformance compared to ETH is its technological capabilities – fast and low-cost transactions, eliminating the need for high gas fees in swaps or DeFi interactions.
Additionally, SOL gained prominence this year with large projects launching tokens via airdrops (BONK). This attracted people into the ecosystem and increased liquidity significantly.
He points out that Solana has persevered despite initial skepticism following FTX’s collapse. Economic efficiency played a crucial role.
Read more: How to buy Solana (SOL)
Deschler points out 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 developers and liquidity to the ecosystem.
Numerous projects on Solana without tokens offer further potential for more liquidity. Upcoming global hackathons are also likely to increase visibility in the coming year.
However, the possibility of ETH-based EVM projects migrating to Solana is challenging as existing counterparts on Solana act as direct competitors.
In conclusion, Deschler noted that Elusiv has reaped significant benefits from the SOL price increase, reaching all-time highs in daily and weekly volume and increasing usage and engagement on platforms such as Discord and Twitter.
Read more: What is Solana (SOL)?
SOL price prediction: Can it turn Ethereum around?
Weekly technical timeframe analysis for SOL/ETH shows that despite breaking out of a long-term descending resistance trendline earlier in the year, SOL price only accelerated its advance in June (green symbol).
Rather, Ethereum outperformed Solana in the first half of the year, and the trend reversed in the second half. The price is nearing its all-time high of 0.055 ETH. However, the rally has gone completely parabolic.
Technical analysts use Elliott Wave theory to identify recurring long-term price patterns and the investor psychology that helps them determine the direction of a trend.
The most likely wave count suggests SOL is nearing the peak of a five-wave upward move (black) that began in June. Wave five has expanded and is almost the same length as waves one and three combined. This is a sign of a possible high.
Therefore, SOL could reach a high near 0.052 ETH and then correct. In this case, the price could fall by 35% to the next support at 0.032 ETH.
SOL/ETH weekly chart. Source: TradingView
Despite this bearish SOL price prediction, a close above the all-time high area 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 enough to turn around Ethereum’s market cap, which is still more than five times larger than Solana’s at $274 billion.
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